Turkey: Manufacturing PMI remains deep in contractionary territory in February
March 1, 2019
Turkey’s manufacturing sector remained firmly entrenched in contractionary territory in February despite an uptick in the Purchasing Managers’ Index (PMI) from 44.2 in January to 46.4 in February, which is a six-month high. The index—produced by the Istanbul Chamber of Industry in conjunction with IHS Markit—stayed below the neutral 50-point mark separating expansion from contraction in the sector for the 11th month running.
February’s uptick was driven by a less strong moderation in output and new orders, with the latter benefiting from a return to growth in new export orders. Demand remained subdued nonetheless and drove firms to recede their payrolls. Anemic demand conditions fed into lesser purchasing activity and a subsequent reduction in stocks of purchases and finished goods.
Commenting on February’s result, Andrew Harker, Associate Director at IHS Markit stated that “with the moderation in total new business continuing to soften, the sector appears to be moving closer to recovery.”
Meanwhile, Central Bank figures showed that the manufacturing sector’s capacity utilization rate edged down from 74.4% in January to 74.0% in February as the rate in the intermediate and investment goods subsectors fell. Moreover, the overall capacity utilization rate remained depressed compared to the readings observed during the stimulus-driven economic boom in late 2017 and early 2018.
Author: Jan Lammersen, Economist