The Greek economy appears to be entering a phase of stabilization as the Economic Sentiment Index and the Consumer Confidence Index compiled by the Foundation for Economic and Industrial research (IOBE) showed a new six-year and four-year high respectively last month.
The data concur with the findings of the Markit Purchasing Managers Index (PMI), which in May came in above 50 points for a second month in succession, suggesting manufacturing is truly returning to growth.
The Economic Sentiment Index reached 99.1 points in May, compared with 95.4 points in April, showing the best reading since 2008. According to IOBE, this highlights that expectations for the economy’s stabilization are being consolidated and comes in stark contrast with 2012, when the average reading stood at 80.3 points, while in 2013 it was 90.8 points.
In industry the sentiment index recovered to 95.1 points last month from 91.9 points in April. The main features recorded are the forecast for an increase in output and exports and the estimate for a decline in stocks. Still, only 9 percent of enterprises that participated in the survey expect employment to rise this quarter.
The PMI data point to an increase in production for the seventh month in a row thanks to a rise in new orders and in employment, particularly in manufacturing. The index slid to 51 points from 51.1 points in April. Markit economist Phil Smith, an expert in the Greek PMI, noted that “the improved performance in terms of exports has contributed to the rise in sales in the domestic market as the general rise in new orders has pushed companies toward raising output and employment levels.”
In construction the sentiment index declined marginally in May to 80.9 points from 81.2 points in April, but remained much higher than a year earlier (65.7 points).
Consumers now appear less pessimistic, as the consumer confidence index edged higher for a third month in succession to reach -52.5 points in May against -55 points the month before. There was also a decline in the rate of people expecting an increase in unemployment from 72 percent in April to 64 percent in May.