Greek manufacturing continuing at a gallop
In line with the general trend in the eurozone, Greece’s manufacturing sector remained on an accelerated path in May, according to the Purchasing Managers’ Index (PMI), which recorded a reading of 53.7 from 53.2 in the previous month – a 23-month high. The PMI in Greece is compiled on the basis of a survey of around 300 companies by NTC Research. A reading of 50 separates expansion from contraction. Incoming new business rose at the highest rate for the last 25 months. Domestic demand was the steam engine of growth, but export orders continued to rise steadily. Production rose for the 30th straight month as a result of the volume of orders growing at the highest rate since August 2005. Employment in manufacturing was up for the 11th consecutive month – although at a very modest rate. The increase in input prices was the steepest in the last five-and-a-half years due to more expensive raw materials. Firms managed to pass on these higher costs in the prices of finished products. In fact, output prices advanced at the highest rate since November 2002 when they started being monitored. Nevertheless, the rate of increase was weaker than that of the rise in input prices, indicating a shrinking in profit margins. A fall in both input and finished product inventories was evident in the May data – often the result of a deliberate policy. The shrinking was at the steepest rate for 81 months as regards finished products. In the eurozone as a whole, the RBS/NTC Purchasing Managers’ Index, which tracks changes in manufacturing activity, rose to 57 in May, its highest since August 2000 when the index was at 58.2, from 56.7 in April. «It’s another indication that the economy is not just rolling along at about par but showing serious signs of acceleration,» said Klaus Baader at Merrill Lynch in London. Chris Williamson at NTC Research, said there were further signs of improvement in domestic demand, particularly in Germany and France.