Greek Manufacturing PMI Recorded Unprecedented Contraction in July

Adding to a dismal Monday for the Greek economy, that has seen a stock market crash and significant revenue losses for Greek firms, financial information service company Markit released its July survey results on Greece’s Manufacturing Purchasing Managers Index.
The Manufacturing PMI denotes the well being of the manufacturing sector of an economy based on number of parameters including output, employment, new business, stock and supplier deliveries. A country’s monthly PMI is recorded through a monthly survey.
If the survey yields results above the 50 mark, that indicates an improvement in the state of the country’s manufacturing sector. If it is less than 50, the sector’s condition has worsened. A 50 point mark signifies no change.
In the July survey, Greece recorded a survey all time low of 30.2.
“Record contractions were registered for almost all variables monitored by the survey, including output, new orders, employment and stocks. There was also a record lengthening in suppliers’ delivery times,” the press release reads.

The analysis found that capital controls that  have been in effect since June 28, bank closures, which lasted for three weeks, and uncertainty over Greece’s future have played a significant role in the manufacturing industry’s dramatic decline. Output was compromised by shortage in new orders and by restraints in manufacturer’s access to goods that were necessary for production.
‘Manufacturers’ buying levels decreased to the greatest extent in the survey’s history in July. Panel member reports indicated that companies commonly faced difficulties sourcing inputs due to capital restrictions and the limited availability of some items. Accordingly, stocks of purchases contracted sharply on the month, as did postproduction inventories,” the release noted.
While the time delivery from suppliers increased significantly and vendor performance was exceptionally low, employment in the manufacturing industry has also been severely hampered.
“July’s survey signalled the steepest drop in factory employment ever recorded during the 16-plus years of data collection. The decrease was the fourth in successive months, following marginal job losses throughout the second quarter of the year,” the press release reads.
In contrast to Greece’s unprecedented contraction, Italy was the survey’s big success, recording a 51 month high of 55.3. Overall, the Eurozone recorded a 52.4 with France being the only country, aside from Greece, with a negative performance, as it recorded a 49.6.
The Eurozone survey concluded that Greece’s decline did not have much effect elsewhere in the currency union.
“The impact of the Greek crisis, and in particular the bank closures, had a striking though not surprising impact on that country’s economy, with the Greek PMI signalling the steepest downturn ever seen in the survey’s 16-year history,” wrote Markit’s Chief Economist Chris Williamson in the Eurozone’s survey results. “It is clear that Greece’s recession deepened significantly in the second quarter.”