Turkish factory activity contracted for the fifth month in a row in August. The Purchasing Managers’ Index (PMI) for Turkish manufacturing ticked up to 47.8 from 47.2 in July, according to a survey by the Istanbul Chamber of Industry and S&P Global. The data still stands below the 50 point level that indicates growth in manufacturing activity.
A slowdown in demand caused firms to scale back output, employment and purchasing activity.
According to the PMI report, new export orders returned to growth for the first time in more than a year. However challenging market conditions led to a further softening of total new orders, the survey showed. Some firms reported that the slowdown in demand led them to reduce workforce numbers.
Input costs continued to rise
As the currency weakens, the input costs continued to rise and it was the main factor behind rising prices according to the PMI survey. Manufacturers in turn raised their output prices in August. Firms were reluctant to hold inventories due to a slowdown in new orders, reducing their holdings of both purchases and finished goods, the survey showed.
“The subdued overall demand picture led to further scaling back of production, employment and purchasing,” Andrew Harker, economics director at S&P Global Market Intelligence, said. “Hopefully, the nascent recovery in exports seen in August will solidify in the months ahead and spread more widely to help the sector move into recovery mode.”
Production contracted in all 10 monitored sectors
According to the Istanbul Chamber of Industry Turkey Sectoral PMI report, in August, for the first time in a little over two years, production contracted in all ten monitored sectors. The sharpest decline in production was recorded in textiles. Employment fell in eight of the ten sectors, with the exceptions being chemicals, plastics and rubber, and machinery and metal products. Manufacturers also generally struggled to win new business from overseas customers. The only sector to show improvement in this area was electrical and electronic products, where new export orders increased for the first time in eight months.
