İSO Manufacturing PMI, released by Istanbul Chamber of Industry (İSO), suggest the biggest monthly contraction for 2023 in manufacturing activities in October. Manufacturing PMI fell to 48,4 in October, lowest on record this year, declining four months in a row.
The October 2023 results of the Istanbul Chamber of Industry (ISO) Turkey Manufacturing PMI (Purchasing Managers’ Index) survey, which is considered the fastest and most reliable reference in manufacturing industry performance, were announced. It is considered as the leading indicator of economic growth, According to the results of the survey, where all figures measured above the threshold value of 50.0 indicate an improvement in the sector, the headline PMI, decreased to 48.4 in October 2023 (previous month 49.6), and remained below the threshold value of 50.0 for the fourth consecutive month.
Although the index showed that the slowdown in business conditions moderated, it was more pronounced than in September. New orders slowed the most sharply in nearly a year, while employment started to decline again. Inflationary pressures eased.
Production up in two sectors, down in 8 sectors
According to the October Istanbul Chamber of Industry Turkey Sectoral PMI report, production increased in only two of the 10 sectors monitored, while employment declined in most sectors. On the other hand, inflation in input costs and final product prices continued its recent trend and lost momentum in most sectors.
Manufacturers reported that domestic and external demand was generally weak in October. As a result, total new orders and new export orders lost momentum. The slowdown in total new orders was recorded at the highest rate since November last year. In line with this outlook in new orders, production also continued to decline in October. Thus, production lost momentum for four consecutive months.
Firms struggled to secure new orders
Commenting on the Istanbul Chamber of Industry Turkey Manufacturing PMI survey data, S&P Global Market Intelligence Economics Director Andrew Harker said: “Demand conditions were the main factor slowing the Turkish manufacturing sector in October, with firms struggling to secure the volume of new orders to support production and maintain employment levels. On the other hand, inflationary pressures continued to ease, which may provide some optimism that a more favorable demand environment is likely to emerge in the near term.”
Purchasing activity declines
In October, input cost inflation declined in eight of the ten sectors monitored. Machinery and metal products and clothing and leather products were the exceptions to this trend. The slowest increase in input prices was recorded in the machinery and metal products sector, which recorded the lowest inflation in nearly four years. Easing cost inflation and challenging demand conditions led base metal firms to cut prices of their final products for the first time in 32 months. Textile firms also reduced their prices, while all other sectors continued to increase. The fastest rise in selling prices was recorded in food products.
Finally, purchasing activity fell across all sectors in October for the first time in more than a year. Among the ten sectors monitored, the weakest performance was again observed in textiles.
