The Greek manufacturing sector remained on a growth trajectory throughout June, as operating conditions continued to improve.
Closing at 53.8 points in June, the seasonally adjusted S&P; Global Purchasing Managers’ Index (PMI) for the manufacturing sector in Greece rose from 53.3 points in May and signaled the strongest improvement in the health of the goods-producing sector recorded since March. The rate of growth was also stronger than the survey’s long-term average.
The recovery in the sector’s health was driven by stronger increases in production and new orders, which companies attributed to improved demand conditions. However, the more favorable sales climate was concentrated mainly in the domestic market, as new export orders continued to decline. At the same time, companies increased their workforce and purchasing activity, driven by heightened optimism regarding the outlook for the coming year.
Supply delivery times lengthened significantly once again, leading to reports of difficulties in replenishing inventories of supplies and finished goods. However, the decline in supplier performance eased slightly, while inflationary pressures also eased. Nevertheless, the rates of increase in input prices and output charges remained at historically high levels.
The overall recovery was supported by faster growth in new sales in the middle of the year. New orders rose significantly, at the fastest pace recorded over a three-month period. Many companies attributed this to a general improvement in demand conditions, while some also pointed to customers’ efforts to build up inventories.
The outlook for international sales remained subdued, as companies received fewer new export orders for the fifth consecutive month. Nevertheless, the rate of decline was the mildest recorded during the current period of continuous contraction and was only marginal.
In line with the increase in new sales, companies in the Greek manufacturing sector raised their production levels in June. Production rose moderately and at the fastest pace recorded since March, as some companies reported that investments in expanding production capacity contributed to the increase.
The June data indicated yet another significant decline in supplier performance relative to companies in the Greek manufacturing sector. Although the extent to which supply delivery times lengthened eased slightly from May, it was among the largest on record for this survey, as delays in transportation and cargo handling linked to the war in the Middle East persisted.
As a result, Greek manufacturers continued to report a significant increase in operating costs. According to reports from panel members, higher prices for transportation, fuel, energy, and raw materials were the main drivers of cost increases.
The rate of increase was notably above the trend observed throughout the survey’s history, though it slowed to the slowest pace recorded over a four-month period. The rate of increase in selling prices also slowed in June, though it was the second-fastest recorded since July 2022.
In June, companies were more optimistic about production prospects for the coming year, as the level of optimism reached its highest point since the war in the Middle East began. Planned investments, new product development, and hopes for further growth in new orders supported the panel members’ expectations.
Along with higher sales, growing optimism supported a further round of job creation. The rise in employment was generally strong and sufficient to lead to a further reduction in backlogs, following the significant increase in May.
At the same time, Greek manufacturers once again increased their purchasing activity in June. Purchases of inputs rose at a steady pace, which was the fastest recorded since March. Nevertheless, delays in supplier deliveries and the use of inventory to meet new order requirements led to difficulties in replenishing stocks. Inventories of both supplies and finished goods declined for the third consecutive month, though at the slowest pace recorded during the current period of continuous decline.