PMI: Coronavirus resurgence crimps Greek factory demand

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Greek manufacturing activity fell in October, with a renewed decline in orders as a resurgence of COVID-19 crimped demand, a survey showed on Monday.

IHS Markit’s Purchasing Managers’ Index (PMI) for manufacturing, which accounts for about 10% of the Greek economy, fell to 48.7 in October from 50.0 in September.

“The impacts of the ongoing COVID-19 pandemic weighed once again on client demand in October, dragging the manufacturing sector back into contraction,” said IHS Markit economist Sian Jones.

Respondents noted that the decrease in new orders in the important food and beverage sector dampened overall production, Jones added.

October data signalled a renewed contraction in production across the Greek manufacturing sector. Anecdotal evidence suggested that a resurgence in virus cases had dampened demand and reduced new order inflows.

The decline was modest overall and the fastest since May, IHS Markit said.

In line with a drop in total sales, new export orders fell for the eighth successive month in October. Manufacturers noted that the drop was due to weak demand from key export partners, especially those in Europe where COVID-19 cases are rising again.

Input costs rose for the fourth month running, often linked to greater raw material costs following supply shortages, while output prices dropped for the eighth straight month.

The reduction in output prices, IHS Markit said, reportedly stemmed from greater competitive pressures as firms sought to boost sales by offering discounts. Although softer than that seen in September, the rate of decline was solid overall.

There was a fractional drop in employment following two months of expansion in August and September, often linked to lower production requirements and voluntary redundancies.

Nonetheless, Jones said manufacturers were upbeat regarding the outlook for output over the next year.

“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.”

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