Greek manufacturing collapsed in July as banks close doors
Greek manufacturing activity plunged in July to its lowest level on records going back 16 years because of a shortage of new orders and significant supply issues caused by a three-week bank shutdown, a survey revealed on Monday.business Updated: Aug 03, 2015 14:53 IST
Greek manufacturing activity plunged in July to its lowest level on records going back 16 years because of a shortage of new orders and significant supply issues caused by a three-week bank shutdown, a survey revealed on Monday.
Greece shut its banks and imposed capital controls on June 29 to avert a bank run after Prime Minister Alexis Tsipras called a referendum on a new bailout.
The shutdown battered an economy already weakened by a six-month standoff between the government and its international lenders on a cash-for-reforms deal.
Markit's purchasing managers' index (PMI) for manufacturing, a sector which makes up about 10 percent of the economy, fell to 30.2 points last month, the lowest reading since the company began compiling the data in 1999. The index remained below the 50 mark that denotes growth.
"Manufacturing output collapsed in July as the debt crisis came to a head," said Markit economist Phil Smith. "Although manufacturing represents only a small portion of Greece's total productive output, the sheer magnitude of the downturn sends a worrying signal for the health of the economy as a whole."
New orders and purchasing activity dived as capital controls and concerns over the country's future hit demand, the survey showed. That also forced manufacturers to cut jobs.
Restrictions on money transfers abroad have choked supplies needed by Greek businesses. More than 43% of manufacturers said they faced longer delivery times last month as a result of the restrictions.