Greek factory activity shrinks in March as export orders weaken: PMI

[ATHENS] Greek manufacturing activity shrank in March for the seventh month in a row as export orders softened, but employment in the sector grew slightly, a survey showed on Wednesday.

Markit's purchasing managers' index for manufacturing, which makes up about 10 percent of the economy, rose to 48.9 last month from 48.4 in February, staying below the 50 mark that denotes growth.

"One major concern is the trend in exports, which up until fairly recently had been acting as a support to the sector but are now an area of weakness as uncertainty deters foreign clients," said Markit economist Phil Smith.

With Greece yet to conclude negotiations with its euro zone partners and the IMF on reforms needed to unlock remaining bailout aid, the uncertainty has reignited fears of a "Grexit".

Output fell for the third month running, while new orders fell for the seventh month, hurt by a sharp drop in new export business.

"Producers have had to scale back output for three consecutive months, meaning the manufacturing industry is now acting as a drag on the wider economic recovery, which looks to be on hold for now," Mr Smith said.

Weak new orders led to reduced production for the third month in a row with firms cutting their purchasing activity in a bid to destock.

On a brighter note, job creation at consumer goods firms was the main driver behind a slight increase in employment in the manufacturing sector.

While input costs rose as firms paid more for imported items and steel, weak market demand and competition forced manufacturers to cut output prices.

REUTERS