Greece: PMI plummets to record low in July
August 3, 2015
The Markit manufacturing Purchasing Managers’ Index (PMI) fell rapidly in July, decreasing from 46.9 in June to 30.2. July’s reading marked a record low for the survey. As a result, the index remains far below the 50-threshold that separates contraction from expansion in the manufacturing sector. Further, July’s poor reading signals the negative impact that the capital controls and increased political uncertainty surrounding Greece’s debt crisis had on the economy.
According to Markit, July’s fall was driven by large dives in almost all variables included in the survey. The largest contractions on record were tallied in output, new orders, employment and stocks. In addition, suppliers’ delivery times increased at the fastest pace since the survey began. Survey participants highlighted the impact of capital controls on demand and increased uncertainty in Greece, which weighed on business. Moreover, employment fell at the fastest rate in over 16 years, which was a significant deterioration from the modest decreases recorded throughout Q2. In addition, prices fell in July at the fastest pace in over two years. Markit analysts commented, “although manufacturing represents only a small proportion of Greece’s total productive output, the sheer magnitude of the downturn sends a worrying signal for the health of the economy as a whole.”