Greek manufacturing activity contracted slightly faster in July, with output and new orders declining as uncertainty over the novel coronavirus pandemic weighed on domestic and foreign client demand, a survey showed on Monday.
IHS Markit’s Purchasing Managers’ Index (PMI) for manufacturing, which accounts for about 10% of the Greek economy, fell to 48.6 in July from 49.4 in June. Readings above 50.0 indicate that activity is growing.
“The manufacturing sector stumbled slightly in its progression towards recovery at the start of the third quarter,” said IHS Markit economist Sian Jones.
Producers continued to report difficulties stemming from the pandemic, Jones said, noting that tourism – a key source of income for Greece – has been weak and some firms have continued to close.
There was a big drop in new business, with some firms saying the impact on the tourism sector had dented new sales inflows. Weak demand from key export markets saw a drop in new business from abroad.
Reflecting the downturn in client demand, Greek manufacturers were less confident on output over the coming year, with optimism dropping notably from June’s four-month high, weighed by uncertainty due to the COVID-19 pandemic.
“Firms also expressed less confidence in future output, with companies highlighting greater hesitancy towards client demand over the coming year and how long it will take to return to pre-pandemic output levels,” Jones said.
On the price front, input costs rose for the first time in four months as raw materials prices climbed. Still, the rate of inflation was marginal overall.
Factory gate prices continued to fall as firms used more discounting in an attempt to boost sales and attract new clients.