Manufacturing PMI declines in August

ISTANBUL

The growth of the Turkish manufacturing sector moderated in August as firms faced challenges in securing new business, according to a survey conducted jointly by the Istanbul Chamber of Industry (ISO) and S&P Global.

The headline PMI in August stood at 49, from 49.9 in July,

below the 50 no-change mark for the second month running, indicating a further slowdown in the Turkish manufacturing sector.

“In response, output and purchasing activity were scaled back, although employment continued to rise marginally. Inflationary pressures remained elevated, slowing only slightly from the recent peaks recorded in July,” the survey said on Sept. 1.

Firms reportedly struggled to secure new orders over the course of the month, seeing new businesses moderate again and to a greater extent than in the previous survey period.

A key factor deterring customers from committing to new orders was strong price pressures, the report said, noting that input costs increased sharply and at a pace that was only slightly softer than the 16-month high posted in July.

Weakness of the Turkish Lira against the U.S. dollar and rising wages were the main factors leading to higher input costs.

In turn, the rate of output price inflation also remained elevated as around 30 percent of respondents increased their charges over the month.

"It was a familiar story for the Turkish manufacturing sector in August, with price pressures acting to restrict demand and leading to a general moderation of business conditions,” commented Andrew Harker, economics director at S&P Global Market Intelligence.

Meanwhile, Moody’s sharply revised upward its GDP growth forecast for the Turkish economy, from a previous 2.6 percent to 4.2 percent for 2023, while lifting its growth estimate for 2024 from 2 percent to 3 percent.

The Turkish economy grew by 3.8 percent in the second quarter of 2023 from a year ago, after expanding 3.9 percent in the first quarter, the official data showed earlier this week.