PMI falls to lowest since November

Greece’s Manufacturing PMI fell by 1.6 points to 49.4 in June from 51.0 in May, according to Markit.

This was the lowest reading since November with the headline figure falling back below the 50-point mark that separates growth from contraction.

The deterioration reflects weakening output growth amid a slight fall in new orders, while employment saw a renewed decline. In addition cost inflation ticked up to a ten-month high, but factory gate prices continued to fall.

The rate of growth in the output at Greek firms was the slowest over the past three months mainly due to a slight dip in incoming new work. The latter had posted a rise in the preceding six months and grew solidly in May. Nevertheless, new export orders rose modestly, yet at the fastest pace since August 2011.

Although the output growth was sustained in June mainly through progress on outstanding business, the rate of drop in backlogs of work was the most marked over the past eight months.

Employment posted a renewed decline in June after marginal gains in each of the preceding two months. In addition, the rate of job losses was solid suggesting an overall decrease in employment in the second quarter of the year.

At the same time, the quantity of items purchased by Greek manufacturers recorded the first back-to-back increases in buying levels since 2008, although the rate of growth was marginal. Rising purchasing activity is mainly related production requirements.

Inventories of output continued heading south, while post-production inventories dropped at a solid rate, although slower than in May.

Manufacturers also faced a rise in average purchase prices mainly due to an increase in oil and paper prices. The rate of the overall input price inflation was the fastest over the past ten months.

In contrast, continued competitive pressures led output prices lower. Nevertheless, the rate of decline was slower than in May.

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Markit analysts concluded that: “Greece’s manufacturing PMI fell back below the crucial 50.0 mark in June, dragged lower in part by slower growth in output. A slight fall in new orders underpinned the loss of momentum.”

“Another negative development highlighted by June’s survey was a renewed decline in manufacturing employment. Moreover, the extent of job losses during the month was perhaps sufficient to wipe out the gains recorded earlier in the quarter, and is another reminder that the sector remains on a weak footing,” Markit analysts stressed.