HS Markit – Improvement of operating conditions in the Greek manufacturing sector in December

Significant improvement in operating conditions throughout the Greek manufacturing sector, due to sharper increases in production and employment levels, were indicated by the data of the December PMI survey.

IHS Markit Purchasing Managers’ Index (PMI) closed at 59 points in December, slightly higher than the 58.8 points in November, indicating a significant improvement in the health of the Greek manufacturing sector .

Overall growth was the strongest on record since August, due to a slower decline in supply stocks and a faster rise in production and employment levels.

New orders rose significantly, although the growth rate slowed to a five-month low. In line with the continuing increase in demand from customers and the growing volume of unfinished business, companies have increased the number of employees at the strongest rate recorded since February 2020.

At the same time, material shortages and delays in shipments have led to a significant deterioration in supplier performance and pushed cost overruns, albeit at a slower pace for four months.

However, efforts to build security stocks have intensified, as input markets have grown at the fastest pace since February 2000.

The IHS Markit Main Purchasing Managers ’Index® (PMI®) is a composite indicator of the performance of the manufacturing economy. It comes from indicators on new orders, production, employment, delivery time and supply stocks. Any value above the zero change point of 50.0 points indicates an overall improvement in sector conditions.

Overall development

The most intense increase in production throughout the Greek manufacturing sector contributed to overall growth. Despite material shortages, the rise was sharp and the fastest in three months, due to the continued increase in demand from customers.

Although the growth rate of new orders slowed down, at the end of 2021 to the weakest recorded in five months, it was generally steep and was supported by stronger demand from domestic and foreign customers. However, some companies reported that many customers were reluctant to place orders due to significant increases in charges.

In line with the further increase in total sales to historically high levels, manufacturers increased their recruitment activities in December. The rate of job creation was the fastest recorded since February 2020, as companies also tried to process unfinished orders. Although the growth rate of backlogs has weakened from a record high in November, it was the second fastest since data collection began 19 years ago. The vast majority of companies attributed the increase in pending work to material shortages and delays in deliveries.

Deteriorating supplier performance weakened slightly by the end of 2021, but continued reports of material shortages and overcrowding in ports led to another significant increase in incoming delivery prices, albeit at a slower pace since August. Companies continued to pass on the highest costs to customers where possible, as sales prices rose at a remarkable rate.

However, efforts to build material stocks to avoid future material shortages have led to the fastest growth in purchasing activity since February 2000. Supply stocks continued to decline, albeit at a slower pace since 2020, than in March as the companies tried to replenish their stocks. However, stocks of finished goods fell sharply as manufacturers found it difficult to replenish stocks that were dispatched to fulfill orders.