PMIs improve in August, but remain in contraction territory

Although the manufacturing PMI indices remain below the threshold of 50 in all CEE countries, August brought an improvement in market sentiment in Czechia, Poland, and Romania as the PMIs inched toward 46.7, 47.8, and 48.4, respectively. Moreover, the manufacturing PMI in Czechia reached the highest level in two years, which we see as encouraging. Such developments come in contrast with Germany, where the manufacturing PMI dropped further in August to 42.4, reflecting underlying structural weaknesses of the entire sector. The PMI index in Hungary arrived at 47.6 but, due to different methodology, cannot be directly compared with other CEE countries. It is also worth noticing that the improvement of PMIs is in line with better sentiment in the industry sector, according to the Economic Sentiment Indicator surveys. The assessment of the situation has also improved further in the two months of the third quarter, and it is almost as good as it was at the beginning of 2023. The composite Economic Sentiment Indicator has also increased in most of the region.