Recovery in manufacturing sustained in May: Survey

ISTANBUL

The recovery in the Turkish manufacturing sector was sustained in May amid further reports by the Purchasing Managers’ Index (PMI) survey respondents of improving customer demand, showed a survey conducted jointly by the Istanbul Chamber of Industry (ISO) and S&P Global.

The headline PMI was unchanged at 51.5 in May, posting above the 50.0 no-change mark for the fifth successive month to signal a further improvement in business conditions in the Turkish manufacturing sector, the survey said.

The modest strengthening in the health of the sector was the joint-largest since the end of 2021.

As a result, new orders and output increased, while firms also expanded their purchasing activity and staffing levels, the survey added.

There were further signs of easing inflationary pressures, although input costs and selling prices continued to increase amid reports of currency weakness pushing up prices.

The Turkish economy expanded more than expected by 4 percent in the first quarter of 2023, bolstered by pre-election spending and strong household consumption, the official data showed on May 31.

Economic activity increased in services, construction and public administration, but declined in the industrial sector and for agriculture.

“There were widespread reports of demand improvements within the latest survey,” S&P Global said.

The most direct impact of this was on new orders, which increased solidly and for the third month running.

New export orders were also up, the survey showed. In turn, manufacturers increased their production volumes, also for the third successive month.

Türkiye’s exports fell by 17.1 percent year-on-year to $19.3 billion in April, the Turkish Statistical Institute (TÜİK) said earlier this week.

Some respondents of the PMI survey indicated that they were just resuming operations following February’s earthquake.

Manufacturers were able to successfully increase their staffing levels for the first time in three months in response to higher new orders, the survey said, adding that there were still some reports, however, of early retirements limiting workforce numbers. Although input costs continued to rise, often reflecting currency weakness, the rate of inflation eased to the weakest in the year- to-date, according to the report.

“The gradual recovery of the Turkish manufacturing sector, both from February’s earthquake and the lingering disruption caused by the COVID-19 pandemic, remained on track in May,” commented Andrew Harker, economics director at S&P Global Market Intelligence.