Greek September factory activity declines, output, new orders fall

ATHENS, Oct 3 (Reuters) - Greek manufacturing activity shrank slightly in September after falls in production and new orders as higher selling prices dampened customer spending and demand, a survey showed on Monday.

S&P Global's Purchasing Managers' Index (PMI) for manufacturing, which accounts for about 10% of the Greek economy, rose to 49.7 in September from 48.8 in August, marking the third straight month of contraction.

Readings above 50 mark expansions in activity.

"Greek manufacturers rounded off a challenging quarter by registering further declines in output and new orders. Although rates of contraction eased from August, client demand remained weak," said S&P Global economist Sian Jones.

Rebounding inflationary pressures and hikes in energy and transport costs had an impact on sales, she said.

Production declined again in September as a result of a continued contraction in new orders. Lower output was linked to weak client demand and the impact of higher selling prices on customer purchasing.

Manufacturers cut staff for the second straight month due to lower production requirements, but the decline in employment was marginal overall.

There was a heavy fall in new orders with the rate of contraction quicker than the series average, but easing for the second month running. New export orders decreased again at a modest pace, the survey showed.

"Strain on customer spending was exacerbated by a faster rise in output charges, thereby ending a three-month period of softening price hikes," Jones said.

On the price front, the rate of cost inflation quickened and operating expenses rose after hikes in material, transport, energy and fuel prices. The pace of input price inflation was historically high.

Firms raised their factory gate prices markedly, passing on higher costs to customers.

"The pass-through of higher energy, transport and material costs, alongside interest rate increases, are upside inflationary risks which could exert further upward pressure on prices and act as a further drain on growth," Jones said.

Reporting by George Georgiopoulos; Editing by Hugh Lawson

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