The Greek manufacturing sector remained in growth territory during June, as the improvement in operating conditions strengthened.
Closing at 53.8 points in June, the seasonally adjusted S&P Global Purchasing Managers’ Index for the manufacturing sector in Greece increased from 53.3 points in May and indicated the strongest improvement in the health of the goods-producing sector recorded since March. The rate of increase was also stronger than the survey’s long-run average.
The recovery in the sector’s health was supported by stronger increases in production and new orders, which companies linked to better demand conditions. However, the more favorable sales climate was focused mainly on the domestic market, as new export orders continued to decline. At the same time, companies increased staffing levels and their purchasing activity, due to stronger optimism regarding the outlook for the coming year.
Supplier delivery times lengthened significantly again, leading to reports of difficulties in replenishing stocks of supplies and finished goods. However, the deterioration in supplier performance eased slightly, while a moderation in inflationary pressures was also observed. Nevertheless, the rates of increase in input prices and output charges remained historically high.
The overall recovery was supported by the faster increase in new sales in the middle of the year. New orders increased significantly and at the fastest rate recorded over a three-month period. Many companies attributed this to the general improvement in demand conditions, while some also pointed to stock-building efforts on the part of customers.
The climate for international sales remained subdued, as companies received fewer new export orders for the fifth consecutive month. Nevertheless, the rate of decline was the softest recorded in the current period of continuous contraction and was only marginal.
In line with the increase in new sales, companies in the Greek manufacturing sector increased their production levels in June. Production increased at a moderate pace and at the fastest rate recorded since March, as some companies reported that the rise was supported by investments in expanding production capacity.
June data indicated another significant deterioration in supplier performance among companies in the Greek manufacturing sector. Although the extent to which supplier delivery times lengthened eased slightly from May, it was among the greatest recorded in the survey’s history, as delays in transport and freight movement linked to the war in the Middle East continued.
As a result, Greek goods producers continued to record a marked increase in operating costs. According to panel members’ reports, higher prices for transport, fuel, energy and raw materials were the main factors behind the increase in costs.
The rate of increase was noticeably above the trend observed in the survey’s history, however it eased to the slowest recorded in a four-month period. The rate of increase in selling prices also declined in June, however it was the second-fastest recorded since July 2022.
In June, companies were more optimistic about the outlook for production over the coming year, as the degree of optimism reached the highest level in the period since the war in the Middle East began. Planned investments, new product development and hopes for a further increase in new orders supported panel members’ expectations.
Alongside higher sales, stronger optimism supported a further round of job creation. The increase in employment was broadly strong and sufficient to lead to a renewed reduction in backlogs of work, following the significant increase in May.
At the same time, Greek manufacturers increased their purchasing activity again in June. Input buying increased at a steady rate, which was the fastest recorded since March. Nevertheless, delays in supplier deliveries and the use of inventories to meet new order requirements led to difficulties in replenishing stocks. Stocks of both supplies and finished goods declined for the third consecutive month, however at the weakest rate recorded in the current period of continuous reduction.