Greece: Manufacturing PMI returns to contractionary terrain in October
November 2, 2020
The IHS Markit manufacturing Purchasing Managers’ Index (PMI) dropped from 50.0 in September to 48.7 in October. As a result, the PMI landed below the critical 50-threshold, moving back into contractionary territory and signaling deteriorating operating conditions in the manufacturing sector.
October’s downturn was largely driven by declining output, which fell at the fastest pace in five months, and a steeper contraction in new orders as the resurgence of Covid-19 cases across Europe weighed on foreign and domestic demand. Moreover, the weaker demand environment prompted firms to cut staffing levels for the first time in three months. That said, firms turned more optimistic amid expectations of an end to the health crisis and reviving client demand. Lastly, on the price front, input costs rose sharply in October, largely attributed to raw material shortages, while firms applied discounts in a bid to ramp up sales.
Commenting on manufacturers rising optimism and the outlook ahead, Siân Jones, economist at IHS Markit, said:
“Although positive expectations were largely driven by hopes of an end to the pandemic, our latest forecast for annual industrial production foresees a modest rise of 2.1% in 2021. As the sector is expected to contract by 4.6% throughout 2020, the recovery to pre-pandemic levels may be drawn out.”