Tim Gosling in Prague -

In a sign that the crisis in Ukraine may be starting to have real effect on the economic recovery in the Emerging Europe region, Poland's manufacturing indicator slumped in April to its lowest in close to a year. Analysts, however, are wary of pinning the blame on the geo-political crisis.

While Poland's Purchasing Managers Index for the manufacturing sector remained above the 50-point threshold signifying growth for the tenth straight month, the April score of 52.0 was disappointing. Dropping from 54.0 in March, it was the second sharp fall in a row, and is the lowest score on the index since July 2013.

The Czech Republic led the argument against a deepening impact from the east on the recovery by pushing its PMI reading to 56.5 - a three-year high. However, the country is more tightly plugged into the Eurozone supply chains than its northern neighbour, and less exposed to the east. 

Indeed, the Czechs followed in the footsteps of Germany, which pushed to a better than expected PMI of 54.1 for the month. The rest of the single-currency region also did well, with the Eurozone reading rising to a three-month high of 53.4. 

Poland had seen its manufacturers strongly expanding in recent months, but the country's greater diversity in terms of export destinations - which did so much to help it through the Eurozone crisis - now looks a risk. "[S]lowing exports [were] linked to slower European demand and political tensions between Ukraine and Russia," writes Agata Urbanska-Giner at HSBC, co-author of the report alongside Markit.

However, she does also note that the PMI drop is at odds with other indicators on business sentiment. Analysts at Capital Economics jumped on that - as well as the strong Czech PMI score - to warn against over-estimating the effects of the Ukraine crisis. 

"Poland will undoubtedly be affected to some degree," writes William Jackson, but "we think the overall impact – particularly on the manufacturing sector – is likely to be limited." The Czech PMI reading is consistent with eventual output growth in the double-digits, he adds, suggesting that Central Europe is hardly being knocked sideways by the crisis.

The analyst also notes that while Polish trade with Russia and Ukraine is larger than that of its neighbours, in comparison with Poland's exports into the Eurozone, "[r]elatively little is exported to the east. Indeed, by our calculations, Ukraine accounts for just 2.5% of Polish manufactured goods exports and Russia another 5%."

Commerzbank is of similar mind. "We watch the Czech PMI closely for underlying direction for the region (it has the best signal-to-noise characteristics)," it writes. The bank says its "base-case remains that despite some prominent April declines, the (recovery) trend will continue, going forward."

At the same time, a strong alternative argument for the apparent derailing of Polish manufacturers is lacking. The drop in the PMI reading was reflected in four of its five components, most notably new orders and output, points out HSBC.

KBC analysts sum up that conundrum. "Czech and Polish PMIs decoupled significantly in April," they write. "Our only explanation for such divergence is nervousness of some Polish businesses caused by the conflict in neighbouring Ukraine. After all, Russia’s share in Polish exports exceeds 5%."