Turkey: Manufacturing activity edges down from near seven-year high in February
March 1, 2018
The manufacturing sector performed robustly in February, with upbeat operating conditions supported by solid demand, strong employment growth and healthy output levels. The manufacturing Purchasing Managers’ Index (PMI), produced by the Istanbul Chamber of Industry (ICI) and IHS Markit, eased to 55.6 in February from 55.7 in January, which had marked the best print since March 2011. As a result, the index still lies comfortably above the 50-point threshold that separates expansion from contraction in the manufacturing sector, where it has now been for a year.
A surge in underlying demand, both domestic and from abroad, buttressed the headline figure in February. Solid demand dynamics continued to fuel extensive restocking operations, which in turn were caused by increased output growth and a further acceleration in employment growth. As a result, pre-production inventories remained broadly unchanged, as higher output offset more intense purchasing activity. Meanwhile, cost inflation continued at full throttle in February, although firms reported softer price pressures from the previous month.
In line with very solid job growth in February, Central Bank data showed the manufacturing capacity utilization rate recorded a back-to-back decrease to 77.8% in February from 78.2% in January, moving further away from the near decade-high figure of 79.9% logged last November.
Turkey Industrial Production Forecast
FocusEconomics Consensus Forecast participants expect industrial production to rise 2.9% in 2018, which is unchanged from last month’s estimate. The panel sees industrial output increasing 3.0% in 2019.
Author: David Ampudia, Economist