Eurozone PMI Shows Collapse in Greek Output

Uncertainty over the country’s future relationship with the eurozone sent Greek manufacturing into a tailspin in July, but that had little impact on other parts of the currency area’s economy, as Italian factories had their best month in more than four years.

The final results of a survey of purchasing managers at eurozone factories released Monday showed activity grew slightly more rapidly than first estimated, and roughly in line with June. But the national survey for Greece revealed a collapse in output, with the headline Purchasing Managers Index plummeting to 30.2, the lowest level recorded in the 16-year history of the series. A Level of 50.0 separates a contraction from an expansion, and the eurozone measure stood at 52.4.

The survey attests to a degree of paralysis not often seen in a developed economy, as businesses lost their access to credit, needed raw materials and other supplies.

“Factories faced a record drop in new orders and were often unable to acquire the inputs they needed, particularly from abroad, as bank closures and capital restrictions badly hampered normal business activity,” said Phil Smith, an economist at Markit, the data firm that compiles the surveys of purchasing managers.

But there were few signs of Greece’s troubles in the survey results coming in from other parts of the currency area. Italy’s manufacturing sector began to revive at the start of the year, and in June recorded a surprise surge in activity. It was even more surprising that it managed to build on that momentum in July, as the PMI rose to 55.3 from 54.1, its highest level in 51 months.

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Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.