Turkey: Manufacturing PMI edges down in July
August 1, 2017
The Manufacturing Purchasing Managers’ Index (PMI) produced by the Istanbul Chamber of Industry (ICI) and IHS Markit eased from 54.7 in June to 53.6 in July, which marked the second-highest reading in more than three and a half years. As a result, the PMI still lies well above the 50-point threshold that separates expansion from contraction in the manufacturing sector, despite the deceleration.
The July report showed that output, new orders and employment growth all remained upbeat despite easing from June’s multi-year highs.. Survey respondents signaled that growth in domestic new orders continued to outpace that of external new business, with growth in overall new demand being one of the fastest in the past six years. Although output growth remained high, strong employment growth and healthy levels of capacity utilization rates in the sector allowed firms to work through existing business in July, with backlogs of work falling for a second month running. Regarding prices, input inflation slowed yet again in July to the weakest level in shy of a year, while output price growth slowed down to a nine-month low.
The upbeat momentum seen in recent months in the manufacturing sector has industrial capacity under pressure. According to the Central Bank of the Republic of Turkey (CBRT), the manufacturing capacity utilization rate eased from June’s nine-year high of 79.0% to 78.7% in July, which still marks one of the strongest readings in recent years.
Author: David Ampudia, Economist