The Purchasing Managers’ Index (PMI) dipped below 50 points in July, raising fears of a recession. Production and, orders dipped last month although S&P Global, which compiles the PMI index, maintains that industrial production will rise this year.

Not only that, S&P Global has revised its estimates upward from May.

Regardless, trends in the manufacturing sector are alarming, as the PMI index itself is considered a leading indicator.

The PMI in July slipped to 49.1 points, from 51.1 in June, with 50 being the tipping point between expectations of growth or recession. This is the lowest level since 49.1 points recorded in February 2021, during the height of the pandemic, which had suspended a great part of economic activity. But in 2021, with the gradual receding of the pandemic, Greek manufacturing had seen both its turnover and profits grow by double digits, after the strict lockdowns of 2020.

New orders recorded their steepest decline since December 2020; purchasing managers blame inflation, which has hit customers’ purchasing power. Orders from abroad also dropped steeply, to levels not seen since early 2021.

Another alarming fact noted by S&P Global is the perception that there is an excess of personnel in the manufacturing sector. Not only there are few hirings, but layoffs are again on the rise. Employment in manufacturing rose only marginally, at the slowest pace since February 2021, with some companies reporting a reduction in their workforce either through layoffs or less hiring of seasonal employees.

A silver lining is that costs rose at a slower rate. But managers are wary of what lies ahead and do not exclude another bout of rising inflation.

Another piece of good news is that expectations for 2023 have risen. But, if the war in Ukraine lasts much longer, with all the related disruptions in the energy markets and global foodstuff supplies, or if there is yet another spike in the global COVID pandemic, we could still get into a deep and prolonged recession. And the purchasing managers are painfully aware of that.