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No let-up in Greek manufacturing woes

Jan 02 2013 12:55
Athens - Greek manufacturing activity shrank for the 40th month running in December, hurt by weak domestic demand and slumping export orders, leading firms to shed yet more jobs, a survey showed on Wednesday.

Markit's purchasing managers' index (PMI) for Greek manufacturing, which accounts for roughly 15% of the economy, fell to 41.4 points in December from 41.8 in November.

The index has now held below the 50 mark dividing growth from contraction ever since September 2009, just before the country's massive debt problems came to light, triggering the crisis that has plagued Greece.

December's decline in manufacturing output was the steepest in four months, bringing the average for the fourth quarter to 41.4, down from an average reading of 42.0 in the third quarter.

In November, Greece adopted a new round of austerity measures to qualify for its next batch of EU/IMF bailout payments, expected to keep its economy in recession for the sixth straight year in 2013.

The government expects gross domestic product (GDP) to contract by 4.5% next year from 6.5% in 2012.

"December data showed no sign of the downturn in Greece's manufacturing sector easing," said Markit senior economist Phil Smith.

"Of particular concern was a faster contraction in new export orders, a trend which has deteriorated considerably since the start of the year," he said.

Greek manufacturers saw a near-record drop in new orders from abroad in December, exceeded only by heavier falls in November 2008 and January 2009.

Weak sales led manufacturers to shed staff again in December, weighing on the country's record-high unemployment rate of 26%. Almost 24% of surveyed firms reported a reduction in payroll numbers since November.

Despite falling demand, input price inflation continued to rise in December on the back of higher raw material prices. Competitive pressures led firms to cut output prices to secure new business.

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