Greece: PMI recovers from record low in August, but remains deep in contractionary territory
September 1, 2015
After hitting the lowest level on record in July, the Markit manufacturing Purchasing Managers’ Index (PMI) rose in August, increasing to 39.1 (July: 30.2). Despite the increase, the index still remains far below the 50-threshold that separates contraction from expansion in the manufacturing sector and at one of the poorest readings in the index’s history. Moreover, August’s poor reading signals the negative impact that the increased political uncertainty surrounding Greece’s debt crisis had on the economy.
According to Markit, August’s poor reading was driven by a sharp drop in production and absence of new orders. Employment in August fell for the fifth consecutive month, however at a more moderate pace compared to July. In addition, post-production inventories fell partly due to a lack of raw materials, although at a softer pace than in July. Regarding prices, input costs rose in August, which survey participants cited as due to the impact of capital controls. Markit analysts commented, “overall, the headline PMI reading paints a disconcerting picture of the health of the Greek economy, as uncertainty builds around the nation’s future political and financial position.”