The rising course of the Economic Sentiment Index and the Purchasing Managers Index (PMI) came to a halt in October, readings showed on Wednesday, in a sign of adjustment after the euphoria of the summer months and possibly due to the relative instability that continues to linger in the financial environment.
The sentiment index that the Foundation for Economic and Industrial Research (IOBE) compiles dropped to 98.3 points from 100.6 points in September, which means it has fallen back below the line (100 points) above which the economy is dominated by optimism.
The decline was somewhat predictable, given that the index had posted a rising course throughout the year until September. After the particularly dynamic third quarter of the year, which includes the high season for tourism, the optimistic estimates regarding the future course of the economy are now reduced, IOBE stressed.
The foundation’s report also highlighted the negative impact that tax obligations are having on households and corporations. Although they were more or less known in advance, meeting them has had an impact on taxpayers’ expectations as regards the economy. IOBE estimates that unless there are any negative twists to the third bailout review and it is completed on time, expectations concerning the course of the economy will be consolidated.
All sectors covered by the index displayed a deterioration, with the exception of retail commerce. Consumer confidence posted a marginal decline, as expectations of a small improvement in employment and the country’s financial state were offset by an anticipated deterioration in household finances and reduced intentions to save money.
The PMI also headed south last month. The index compiled by Markit dropped to 52.1 points from 52.8 points in September, but the fact that it remained above the 50-point watershed means manufacturing remains on a growth course. This was thanks to the increase in new orders, both from within Greece and from abroad, the rise in hirings, and the increase in output for a fifth consecutive month.