Greek manufacturers reported a slight improvement in operating conditions in December, ending a sequence of deterioration which began in September 2014. The upturn in manufacturing was driven by higher production, which returned to expansionary territory for the first time in 12 months.
Encouragingly, a slight increase in staff numbers was also reported. The seasonally adjusted Markit Greece Manufacturing Purchasing Managers’ Index® (PMI® ) – a composite indicator designed to measure the performance of the manufacturing economy– registered 50.2 in December. This was up from 48.1 in November, and signalled the first improvement in operating conditions for 16 months, albeit marginal. A welcome return to growth in output was registered by Greek goods producers during December.
Moreover, the rate of expansion was the sharpest since August 2014. The rise in production occurred in spite of another drop in incoming new orders. Overall new business has dropped in every survey period since September 2014, with panellists blaming the latest fall on a lack of liquidity in the market.
New export orders also declined, yet the rate of contraction was the weakest in 13 months. December survey data highlighted a marginal increase in employee numbers at manufacturing companies in Greece. The latest rise ended an eight-month sequence of job cuts and signals a broad stabilisation of the manufacturing labour force. With higher headcounts reported, outstanding business continued to fall, albeit at the slowest rate in 23 months.
Panellists linked the decline to the completion of outstanding projects. Goods producers reported lower post-production inventories during December. The rate of decline was substantially faster than the long-run series average, with survey participants linking this to imposed capital controls on the market.
At the same time, input buying decreased for the sixteenth month running in December. However, the rate of contraction eased to the slowest in one year. The reduction in purchasing activity partly reflected lower intakes of new work. Meanwhile, input stocks continued to contract at a sharp rate
