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CEE ECONOMY-Czech, Hungarian manufacturing sentiment up amid supply snags

·1 min read

(Wraps Hungarian and Czech PMI releases)

May 3 (Reuters) - Czech manufacturers were at their most upbeat in more than three years in April, cheered by strong output and order growth while factories also grappled with supply delays and shortages.

The rising factory sentiment was mirrored in central European neighbour Hungary, where its purchasing managers' index (PMI), using a different methodology, rose back above the 50-mark separating expansion from contraction.

IHS Markit's Czech PMI rose to 58.9 from 58.0 in April, data showed on Monday. A drop in vendor performance - normally a sign of improving conditions that lifts PMI readings - also boosted the headline figure, the survey said.

Factories around central Europe are facing some degree of component shortages and supplier delivery delays, which has been seen in the global crunch for semiconductors hampering the car industry and a shortage of global shipping containers.

This is also pushing up costs.

"Overall, there is apparent strong optimism among businesses, and that is despite problems with supplier chains. If they pass, Czech industry should head for strong growth," Komercni Banka economist Jan Steckerova said.

Central Europe's economies, which count heavily on the car sector, are on course to rebound in 2021 after contractions caused by the coronavirus pandemic last year.

Lockdown measures hitting retail and hospitality are starting to ease throughout the region, adding to consumer confidence.

In Hungary, the factory PMI grew to 50.8 in April from a revised 48.8 in March, index publisher the Association of Logistics, Purchasing and Inventory Management said. Production volumes and new orders increased and stayed above the 50-point threshold.

Poland's PMI is due on Tuesday. (Reporting by Marton Dunai in Budapest and Jason Hovet in Prague; Editing by Toby Chopra)