Contraction in Turkey’s manufacturing eases in October

ISTANBUL

Turkey’s Purchasing Manufacturing Index (PMI) saw a near-stabilization of business conditions in the Turkish manufacturing sector in October as a result of contributions from exports, as well as an increase in new orders and output. 

A survey data compiled by the Istanbul Chamber of Industry (İSO) and IHS Markit showed the PMI increased to 49.8 in October from 48.3 in September. This was higher than the average for 2016, which was at 48.9.  

 Although any reading below 50 indicates a contraction in the sector, the latest figure showed some easing in the manufacturing sector’s contraction. 

 “The Turkish PMI moved closer to the neutral mark in October, signaling a near-stabilization in the manufacturing sector. With contributions from exports, the seasonally adjusted output and new orders indices rose compared to last month but remained below the no-change mark of 50 in October. Restocking of inputs and hiring from goods producers suggests that output growth may resume in the coming months,” said Trevor Balchin, the senior economist at IHS Markit.

The seasonally adjusted output and new orders indices remained below the no-change mark of 50 in October but rose to its highest since May, the report showed.

Having improved in August and September, manufacturing employment also continued to increase in October. 

New export orders rose for the second time in three months, and purchasing of inputs by manufacturers grew at its strongest rate in nearly two years, the report added. 

“In a sign that output may rise in the coming months, manufacturers stepped up their purchasing activity. The rate of growth was the fastest since November 2014, and stocks of purchases expanded for the first time in nine months. The weak lira exerted upward pressure on manufacturing input prices in October, with the rate of inflation reaching a 12-month high. Output prices rose at the fastest rate in five months as a result,” the report said. 

ISO Turkey Manufacturing PMI is a composite single-figure indicator of manufacturing performance. It is derived from indicators for new orders, output, employment, suppliers’ delivery times and stocks of purchases.