Greeks rein in their optimism

Greeks rein in their optimism

While Greek consumers and enterprises still foresee an economic rebound, their expectations have cooled somewhat, as considerable uncertainties concerning the course of the economy remain, particularly as regards when the country emerges from its bailout program this summer.

The Purchasing Managers Index (PMI) compiled by Markit showed a decline in expectations in the manufacturing sector in April, for a second month in a row, to their lowest point since last November. The Economic Sentiment Index that the Foundation for Economic and Industrial Research (IOBE) compiles pointed to an improvement last month, but the foundation’s analysts attribute that to seasonal factors such as the start of the tourism season.

The PMI reading fell to 52.9 points in April from 55 points in March, managing to stay above the 50-point mark between growth and contraction. Manufacturing orders from abroad grew for a seventh straight month, albeit at a slower pace, while there was a similar picture as regards hirings. Output expanded for an 11th consecutive month in April, but at the weakest rate of the last five months.

At the same time the IOBE index moved back above the 100-point level last month, rising to 103.6 points from 99.8 points in March. There was a rise in most economic domains, with the exception of the construction sector.

There was also a significant increase in consumer confidence, which IOBE also measures, but this hangs on an exceptionally delicate balance: The consumer confidence index reached -48.8 points in April, up from -52.8 points in March, climbing to its highest point in three years. The reason for that was the absence of any significant political or economic developments for yet another month, IOBE noted on Wednesday.

The improvement in consumer confidence has not translated – for now – into a increase in purchases, due to fears of fresh austerity measures. Although households appear more optimistic on the country’s and their own finances, there was a growing reluctance (at 63 percent from 60 percent in March) to spend more.

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