Turkey: Manufacturing activity expands at fastest clip in nearly seven years in January
February 1, 2018
The manufacturing sector performed brilliantly at the outset of the year, with activity in the sector accelerating markedly on soaring order books. The manufacturing Purchasing Managers’ Index (PMI) produced by the Istanbul Chamber of Industry (ICI) and IHS Markit recorded a back-to-back increase from 54.9 in December to 55.7 in January, the highest figure since March 2011. The index now lies further above the 50-point threshold that separates expansion from contraction in the manufacturing sector, where it has now been for shy of a year.
A surge in domestic and foreign demand for Turkish manufactured goods buttressed January’s PMI figure. Total new order logs rose at the fastest pace since February 2011 and supported higher output levels, growth of which was also the highest in nearly seven years. In turn, firms continued to add to their payrolls to meet increased production requirements and intensified purchasing activity operations. Increased staffing levels amid solid demand and output levels saw the manufacturing capacity utilization rate easing from 79.0% in December to 78.2% in January, the weakest tally in 10 months.
Survey-respondents continued to note an unfavorable exchange rate and rising commodity prices as reasons behind the sharp increase in cost burdens in January. In response to higher cost pressures and aided by solid demand, manufacturers were largely able to roll these costs onto consumers, with output inflation at a one-year high.
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