* Polish PMI falls to 42.1 in April
* Czech PMI rises to 38.6 from 34.0 in March.
* Hungarian PMI, different methodology, edges higher
By Michael Winfrey
PRAGUE, May 4 (Reuters) - Manufacturing's decline slowed in the Czech Republic and Hungary in April in a sign that recession may be approaching a bottom but activity in Poland, the region's biggest economy, dipped faster than a month ago.
The economic crisis, particularly a fall in demand for goods produced in the European Union's low-cost east, has saddled the region with double-digit falls in industrial activity and caused economists to cut growth outlooks since last year.
Poland's Purchasing Managers' Index (PMI) inched down to 42.1 in April from a five-month high of 42.2 in March, Markit Economics and ABN Amro said.
The Czech index rose to 38.6 in April from 34.0 the previous month while Hungarian figures, using different methodology from the Markit data, edged up to 40.4 from 39.5.
The data came alongside euro zone PMI data showing the slowest decline in six months. A score above 50 indicates manufacturing is expanding, while a score below this means it is contracting.
The Polish contraction was the 12th month in a row. It was still better than the average posted in the first three months of the year, but Markit said conditions remained tough overall, with sharp falls in output, new orders and jobs.
"This is a surprisingly low result compared to our prognosis ... Apparently companies are aware we are still far from the end of the slowdown," said Piotr Bielski, senior economist at Bank Zachodni WBK. "I am afraid the slowdown both in Poland and Europe will last until the end of the year at least."
Poland is one of the least exposed countries in the region to euro zone demand, with only around 40 percent of its economy based on exports. It is also the only one that economists say may escape recession this year.
But analysts say what started as an industry-led contraction may be filtering into the rest of the economy, particularly the large internal market of 38 million Poles. Evidence includes a 0.8 percent decline in retail sales and a jump in unemployment, which now stands at 11.2 percent.
CZECH, HUNGARIAN SLOWDOWN EASES
The small, open economies of the Czech Republic and Hungary are the opposite case. There, factories owned by foreign companies including Volkswagen, Audi, PSA Peugeot, Toyota and Siemens pump out cars and electronics for sale in Germany.
Exports equal about two thirds of gross domestic product in both Hungary and the Czech Republic.
Both countries have seen companies cut production and shed workers due to falls in orders, cutting exports by almost a third over last year's levels.
The biggest Czech firm, Volkswagen-owned carmaker Skoda, said sales -- 90 percent of which go abroad -- dropped 39 percent in euro terms in the first quarter, while physical production had fallen 45 percent.
Central European governments have also slashed growth forecasts, with the Czechs expecting a 2009 contraction of more than 2 percent and Hungary a fall in GDP of up to 6 percent.
Analysts said the Czech PMI data -- the 10th decline in a row -- showed the economic downturn there may be approaching a bottom, although they were also careful to note the contraction was not yet over.
"It is a confirmation that the most dramatic decline is behind us, and that it was in the first quarter," said Pavel Sobisek, chief economist at Unicredit in Prague. "We can expect a further moderation in the decline, although the PMI level is still far from (showing) the drop has stopped."
Markit said Czech manufacturers continued to make substantial cuts to workforces in April. The employment index rose from March's record low, but still indicated a rapid rate of decline. (Additional reporting by Jakub Jaworowski and Gergely Szakacs; editing by David Stamp)