Turkish industrial production rises above estimates in August

ANKARA

REUTERS photo

Industrial production in Turkey exceeded estimates in August, driven largely by a sharp increase in durable goods production, according to data from the Turkish Statistical Institute (TÜİK) released on Oct. 8.

Industrial production – a measure of output in the manufacturing, utilities and mining sectors – increased 2.9 percent in August from the previous month, and 7.2 percent from the same period of the previous year, according to TÜİK data. 

The increase came after a 1.5 percent drop in industrial production in July, but analysts attributed that fall in part to the holiday season.

“We did not expect such strong data today,” economist Bora Tamer Yılmaz at Ziraat Securities told Anadolu Agency. 

“Especially after German factory orders this week came in lower, we thought our industrial production would remain weak. Our industrial production is closely linked to production in Germany. We believe that domestic demand in the third quarter eased down. For example, automotive sales declined. But, in contrast, export and manufacturing remained strong, and manufacturers are working through their current inventory. This suggests a positive projection for production in the coming quarter,” he said, as quoted by Anadolu Agency.

Third quarter figures under scope

Industry Minister Fikri Işık said the figure could enable the government to revise its year-end growth estimates. 

“Unless a serious drop in economic activity is seen in September data, we could achieve growth of around 3 percent in the third quarter despite several uncertainties. Our existing estimate was lower actually. Today’s industrial production data will enable us to revise some estimates up,” he said during a live interview on broadcaster NTV on Oct. 8. 

On the other hand, the increasing trend may be temporary due to the continuance in uncertainties in the country, which have slowed the economic activity down. 

“Our industrial production estimates for September are still very low due to the long Eid holiday last week. In this vein, we continue to estimate that the GDP growth, which was 3.1 percent in the first half of the year, has slowed down in the third quarter and the economy will most probably close the year with 2.6 percent of growth. Our 2016 GDP growth estimate is 3.2 percent,” said Halk Investment in a note, as quoted by Reuters. 

The largest increase was seen in durable consumer goods, such as appliances, home and office furnishings, which were up 11.6 percent from July.

However, transport equipment production dropped 12.7 percent from the previous month, according to the data.