Greek Economy Suffers Record Collapse In February
There are those who recall that not ten days ago, according to the IMF's Greek (un)sustainability analysis, worst case scenario no less, Greek GDP would somehow miraculously post just a 1% drop in 2013. Unfortunately this won't happen. According to the overnight PMI update out of Europe (where was saw the jobless rate at the highest since 1997), the Greek economy just imploded at a record pace. This follows the already horrendous budget revenue data from January which came in down 7% on expectations of a 9% rise. Sure enough, as expected the fact that the entire country has taken the rest of 2012 off with no incentive to actually work, will do miracles for Greece. From Reuters: "The Markit Manufacturing Purchasing Managers' Index (PMI) for Greece fell to a survey low of 37.7 points in February from 41.0 in January, staying below the 50 mark that divides growth in activity from contraction for each of the past 30 months. Production and new order volumes fell at the sharpest pace in the near 13 year history of the survey as austerity sapped demand. New export orders fell for a sixth straight month and at the steepest rate since May 2010." Translated: the situation is hopeless and getting worse. Expect the German, pardon Troika, Kommissar to be shocked, shocked, to find out that not only do banks in Greece have no deposits left, but the entire economy picked up and left.
Some disturbing charts validating the sad reality of Greece:
More from Reuters:
Greek manufacturing shrank at its fastest rate in at least thirteen years in February as production and new orders declined at record rates, driving the sector deeper into recession and forcing firms to shed more jobs, a survey showed on Thursday.
Greece will apply additional fiscal austerity to shore up its finances as part of a new rescue package it agreed with its euro zone partners and the IMF to avert a chaotic default and emerge from a severe debt crisis.
Greece's 215 billion euro economy shrank by an estimated 6.8 percent in 2011, its fourth straight year of recession. It is seen contracting this year as well.
"The latest survey provided another stark reminder of the difficulties the Greek economy is facing. Problems of accessing credit, combined with austerity, are undermining activity and demand with little evidence of this situation improving anytime soon," Markit senior economist Paul Smith said.
Greek firms struggled to access working capital and meet vendor demands for cash payments to deliver inputs. The fall in production led to more job losses.
"While companies are trying to maintain employment via reduced working days and hours, the inevitable impact of rapid declines in output and sales are further cuts to payroll numbers, which fell at a marked and accelerated pace," Smith said.
Greece's unemployment rate hit 20.9 percent in November, the latest available data, highlighting the pain of higher taxes and cuts in public sector pay and pensions which suppress economic activity.
So if wondering what is sending markets higher, it is the return of the expectation that the global economic collapse (whereby sliding US consumer spending and income somehow drives consumer confidence higher) will force banks to do what they do best: CTRL+P.
Full PMI release here.