* Retail sales, construction also rebound
* Analysts caution too early to call turning point
By George Georgiopoulos
ATHENS, Feb 3 Greek factory activity grew in
January, a survey showed on Monday, marking its first expansion
since the country's debt problems came to light in 2009 and
plunged the euro zone into a crisis from which it is still
It is the latest in a series of positive economic data which
suggest Greece's six-year economic slump may be bottoming out.
Markit's purchasing managers' index for manufacturing, which
accounts for about 10 percent of the Greek economy, rose to 51.2
in January from 49.6 in December, its first time above the 50
line dividing growth from contraction since August 2009.
That came days after data showed Greek retail sales rose in
November for the first time since April 2010, while construction
activity grew in October for the first time in two years.
Greek stocks welcomed the data with the benchmark share
index gaining 2.01 percent to 1,201.88 points.
Still, Greece remains locked in difficult negotiations with
its EU and IMF lenders and is expected to require further debt
relief and more bailout aid before it can put its debt crisis
behind it. Analysts said it was too early to call a turning
"Before we go from extreme pessimism to extreme optimism we
need to be cautious," said Ilias Lekkos, an economist at Greek
lender Piraeus Bank. "Macroeconomic data has started to
stabilize and appears slightly improved - but compared to very
low levels previously."
Greece's economy has shrunk by a quarter since a recession
took hold in 2008 and, in part, deepened due to fiscal rigor
demanded by the European Union and International Monetary Fund
in return for bailout funds to rescue it from bankruptcy.
Athens and its international lenders expect the 183 billion
euro economy to pull out of recession this year, projecting GDP
growth of 0.6 percent, while the country's central bank sees it
growing by 0.5 percent.
Greece, which has been bailed out twice by the EU and the
IMF, has been kept on a drip feed of funds totalling 240 billion
euros but they have come at the price of unpopular austerity
measures, including tax rises and cuts to pensions and wages.
Unemployment has jumped to record levels - at 27.8 percent
it is more than twice the euro zone average - and thousands of
businesses have shut.
For manufacturers, a second consecutive rise in incoming new
orders in January boosted output levels across the sector, with
orders from abroad also strengthening.
"A slight rise in new export orders contributed to the
improved performance, though the data inferred that it was the
domestic market that provided the principal boost," said Markit
economist Phil Smith.
But despite expansions in production and new orders,
manufacturers continued to lay off staff in January, with
staffing levels having fallen every month since May 2008.
(Writing by Karolina Tagaris, editing by Deepa Babington and