Greece’s Purchasing Managers’ Index (PMI) fell to 42.8 points in January, from 43.1 in December, to a seven-month low, reflecting shrinking production, employment and inventories in the country.

The index continued falling for the 17th consecutive month. Incoming new jobs in the Greek manufacturing sector fell in January, although at a slightly slower pace compared with December, reflecting adverse financial conditions, low demand and high inventories.

Greek manufacturers used their available funds to cover pending works, although production fell more rapidly in the first month of the year. Greek manufacturers continued cutting their workforce, their purchases and inventories in January in an effort to manage their costs amid adverse business conditions prevailing in the country.

Demand for raw materials fell further in the first month of 2011, along with delivery times. The cost of inflows rose sharply reflecting higher energy and raw materials prices, along with higher VAT rates.

The Purchasing Managers’ Index measures business activity in the manufacturing sector. Readings above 50 indicate a growing sector, while readings below 50 a shrinking sector.