Industrial production at new high supports growth

ISTANBUL - Hürriyet Daily News

Capital goods registered the highest increase in industrial production with a 9.6 percent rise year-on-year in May, TÜİK says. Hürriyet photo

Industrial production, a leading indicator of growth, nearly doubled market expectations in May, supporting optimistic estimates that the official annual growth target of 4 percent may be achieved.

Capital goods, consumer non-durables and intermediate goods production registered the highest increases.

Turkey’s industrial production index rose by 5.9 percent in May 2012 compared with the same month last year, while the figure was 7.5 percent compared with the previous month, the Turkish Statistical Institute’s (TÜİK) monthly report revealed yesterday. Market expectation was 3.2 percent.

There was no calendar effect year-on-year on the industrial production, while on a monthly basis seasonal and calendar-adjusted industrial production rose 1.1 percent.

Industry Minister Nihat Ergün said yesterday that the industrial production index had hit the highest May level since 2005, when the new index series was introduced.

“Industrial production has been constantly increasing for the last 30 months,” he said, adding that the figures supported the government view that the 4 percent growth target would be easily met.

“Economic activity in May is in line with the expectations of the Central Bank. The bank predicts a slight improvement in economic activity in the second quarter over the first and is implementing a monetary policy accordingly,” Gülay Elif Girgin, an economist at the Oyak Yatırım told Anatolia news agency.

In the sub sectors, the level of industry, mining and quarrying increased by 4.2 percent, manufacturing increased by 5.8 percent and the electricity, gas, steam and air conditioning supply increased by 7.3 percent in May compared to the same month of the previous year, TÜİK said. “Concerns regarding economic growth are eased further with these production figures,” said Gülizar Türk, manager of the economic research department at Anadolu Yatırım.

2. quarter figures awaited

“First-quarter growth was up year-on-year, but it was slightly down compared with the previous quarter. Second-quarter growth figures will be important,” she said.

Turkey’s economy grew 3.2 percent year-on-year in the first quarter, while the figure was 5.2 percent in the last quarter of 2011.

However, Finansbank Chief Economist İnan Demir said it was too early to revise growth estimates upward, as there are downward risks to growth due to ongoing uncertainties in the eurozone in the second half of the year, according to Reuters. Industrial production was up 3.2 percent in the first five months of the year from the same period last year, said Gizem Öztok Altınsaç, an economist at the Garanti Yatırım, adding that this was proportionate to her annual growth forecast of 2.5 percent.
Capital goods production rose 9.6 percent year-on-year in May, marking its highest increase in the main industrial categories. This was followed by a 7.8 percent increase in consumer non-durables, and by a 5 percent increase in intermediate goods production. Energy production recorded a 2.5 percent increase. Durable consumer goods production was up 2 percent.

Transportation vehicle manufacturing recorded an impressive 195.1 percent increase, followed by 57.4 percent in computer, electronics and optical products production.

“The most significant contributor in May is transportation vehicles [production], most probably due to locomotive manufacturing,” she said, adding that computer production had been a leading contributor thanks to the FATİH Project to deliver smartboards to Turkish classrooms.