Activity in Greece’s manufacturing sector contracted again in October with the key indicator hitting a five-month low as production and new orders declined, a survey showed on Tuesday.
Markit’s Purchasing Managers’ Index (PMI) for manufacturing, which accounts for about 10 percent of the Greek economy, fell to 48.6 points last month from 49.2 in September. A reading below 50 denotes a contraction in activity.
Output declined for the second straight month in October and at the quickest pace seen since July, with manufacturers citing weak demand as the main driver.
“Greece’s manufacturing sector took another hit in October,” said IHS Markit economist Samuel Agass. “Output, total new work and stocks of purchases all contracted at a sharper pace than in September, intensifying the overall downturn in the sector.”
October saw a decline in new orders, both in the domestic market and from abroad. Export business weakened at the sharpest pace since June.
Firms nevertheless continued to add to payrolls, albeit marginally, extending the trend of job creation to five successive months, the survey showed.
“The surprising element from survey data was the intent shown by firms to maintain their current hiring policies in the face of a substantial deterioration of outstanding business levels,” Agass said.
But with input costs continuing to rise and producers cutting selling prices further, the likelihood that the growth trend in employment would be sustained until the end of the year looked weak, he said.
The survey showed cost pressures intensifying for the seventh straight month, with producers citing higher prices for steel and dairy products as factory gate prices were lowered for the fourth successive month.