Lower prices boost Greek exports
Exports continue to drive the Greek economy's recovery after years of recession.
The Purchasing Managers' Index (PMI), a survey-derived number reflecting expansion or contraction in the manufacturing sector, stood at 53.7 in January 2019, slightly down from 53.8 in December 2018.
PMI is based on five main factors: new orders, inventory levels, production, supplier deliveries and employment. A number over 50 reflects growth, while a number of 50 represents contraction.
More significantly, the sub-index of orders from abroad grew at the fastest pace in the past 12 months, despite warnings from the World Trade Organization that global trade expansion this year will be more modest than originally forecast. International orders for Greek manufacturing products grew for the 16th month in a row.
Expanding one's share in international trade does come at a cost: Greek manufacturers dropped their prices for the second consecutive month, reversing an upwards trend that had started in the final quarter of 2017. But this time, the drop in manufacturing prices was assisted by a decelerating increase in the cost of raw materials and factors such as packaging material and farming product prices, which, in January 2019 stood at its lowest level since August 2016. Still, an increase is an increase and this, combined with the lower manufacturing prices, means lower profit margins. But the rise in orders, both domestically and abroad, has resulted in a heightened optimism over prospects not seen since mid-2012.
Stronger exports also mean higher employment: job growth in manufacturing in the year ending January 2019 was the second strongest since the PMI surveys began.
The hopeful PMI data are backed up by the Hellenic Statistic Agency's figures. International sales grew 11.6% year-on-year in 2018, while domestic sales were up 3%. The Producer Price Index for exports declined 4.9% year-on-year in December 2018, compared to just 0.3% in November.
