Turkey: Manufacturing operating conditions improve at weaker pace in November
January 4, 2021
Manufacturing sector operating conditions improved at a softened rate in December, with the Istanbul Chamber of Industry Turkey Purchasing Managers’ Index (PMI) dropping to 50.8 from 51.4 in November. That said, the index remained north of the neutral 50-threshold that separates an overall expansion from contraction in business activity.
The downtick in the headline reading reflected easing output and softer new orders growth amid Covid-19 restrictions. Moreover, a renewed uptick in new cases and consequent new restrictions in export markets also saw new export orders growth easing. Despite weakened demand dynamics, manufacturers continued to increase staff numbers for the seventh month running. Meanwhile, producers faced difficulty obtaining raw materials, leading to falls in stocks of purchases. Turning to prices, input cost price pressure rose strongly due to supply-side issues and lingering currency weakness—inflation rose at the fastest pace since September 2018. Output prices, as a result, rose sharply.
Andrew Harker, economics director at IHS Markit, commented:
“The Turkish manufacturing sector ended 2020 facing twin headwinds. First, the COVID-19 pandemic which has blighted so much of the year led output and new orders to soften. Second, severe supply-chain disruption hampered the ability of firms to secure the materials they need and added to already sharply rising cost burdens. Despite these challenges, firms were keen to expand capacity, taking on extra staff and purchasing more inputs. This suggests that manufacturers will be ready as and when the aforementioned constraints on operations ease.”
Author: Jan Lammersen, Economist