The Greek manufacturing activity in July has plummeted to levels that record back to 16 years, owing to shortage of new orders and significant supply issues caused by the three week bank shut down. 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 hit the economy which was already beaten up 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.”
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.