ECONOMY

Manufacturing feels the bite

PMI and economic sentiment index slip in November on price hikes, raw material shortages

manufacturing-feels-the-bite

The wave of price hikes and the shortages in raw materials are leading to order cancellations by clients of manufacturing units in Greece, while the lack of components is also resulting in delivery delays and price increases.

That phenomenon, which the business world had long feared and warned of, is now reflected in the latest purchasing managers index (PMI) survey by IHS Markit, and the economic sentiment survey of the Foundation for Economic and Industrial Research (IOBE), both of which were released on Wednesday.

“Goods producers reported that price increases and raw material shortages have resulted in the cancellation of orders by their clients. The growth rate of new orders has also slowed down,” IHS Markit noted. It added that “the difficulties in the procurement of raw materials and the steep rise in new orders led to a high volume of unprocessed works and a historic rise for the survey in the middle of the fourth quarter. The low availability of imports has negatively affected production capacity, although the rise in employment levels was the strongest seen in five months.”

The PMI index slipped to 58.8 points in November from 58.9 points in October. IOBE’s business expectation index eased last month to 110.2 points from 112.9 in October on expectations of reduced orders.

The main shortages of raw materials for industry are – according to manufacturing company officials who spoke to Kathimerini – in packaging material, such as paper, plastic, aluminium and even glass. The problem is particularly acute for chemical industries which use plastics as their prices are almost three times higher than those of last year and their shipping costs up to eight times more and delays in deliveries may exceed 10 weeks.

Apparel manufacturers are importing fabrics at higher prices too, with hikes reaching up to 80% year-on-year.

That phenomenon has hampered growth for Greek manufacturing this year, with an obvious impact on the economy.