Greek PMI grows in Jan for first time since Aug 2009

Economists said the long-awaited recovery in Greek manufacturing boosted hopes the overall economy will finally stop shrinking this year – amid reports that the eurozone is close to agreeing a third bailout loan for Greece, worth up to €20bn.

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.

Greece has been stuck in a six-year, austerity-driven recession that has shrunk gross domestic product (GDP) by about a quarter and driven unemployment to record highs.

"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.

"Deflationary pressures persist, with firms lowering their prices again amid ongoing efforts to grow sales. A knock-on effect was a further squeeze on profitability," Smith said to Reuters.