Turkey: Manufacturing conditions improve at a quicker pace in November
The Istanbul Chamber of Industry Turkey Purchasing Managers’ Index (PMI) rose from 51.2 in October to 52.0 in November, signaling a stronger improvement in business conditions compared to the prior month, as the index moved further north of the neutral 50-threshold that separates an overall improvement in business conditions from a deterioration.
The pickup came on the back of a rebound in output, despite inflationary pressures and supply bottlenecks. Production was supported by a rise in employment. Less positively, new orders growth slowed for the second month in a row amid weak domestic demand, as well as material shortages and elevated price pressures. However, new export orders continued to increase. Input prices rose at the quickest rate since September 2018 amid ongoing lira weakness; renewed currency volatility in mid-November will likely see input prices continue to rise going forward. Firms rose their selling prices as a result, with output prices increasing at the quickest rate on record.
Andrew Harker, economics director at IHS Markit, commented:
“While the Turkish manufacturing sector overall remained in growth territory in November, firms are coming under increasing pressure from sharply rising costs as currency weakness exacerbates already high raw material prices. […] If firms are to gain some respite from these pressures in the coming months they will need to see some stabilisation in the lira.”