Greek manufacturing activity shrank in May for the ninth month in a row, but the pace of decline in new business and production slowed from April, leading companies to add jobs for the first time in six months, a survey showed on Thursday.
Markit's Purchasing Managers' Index (PMI) for manufacturing, which accounts for about 10 percent of the economy, rose to 49.6 from 48.2 in April. Readings below 50 denote contractions in activity.
The rate of decline in new orders, including from abroad, was the lowest seen so far this year, leading manufacturers to slightly reduce output.
“May's PMI signaled a further worsening of conditions in the Greek manufacturing sector. Nonetheless, underlying trends were more positive as the rate of deterioration eased for the second successive month,” said IHS Markit economist Alex Gill.
Faced with lower production requirements, companies cut purchasing activity for the fifth time in as many months in May but increased staffing numbers fractionally.
Strong competitive pressures forced manufacturers to lower their factory gate prices as cost burdens grew, squeezing profit margins.
“On the political front, bailout negotiations are yet to be finalized. The resulting uncertainty may weigh on the index in the short term as investment decisions are postponed,” Gill said.
On a more positive note, the survey showed that manufacturers remained confident that output would increase over the coming 12 months.