Turkey: Manufacturing PMI remains deep in contractionary territory in January
February 1, 2019
The Purchasing Managers’ Index (PMI), produced by the Istanbul Chamber of Industry (ICI) and IHS Markit, was stable at 44.2 in January. As a result, the index remained below the crucial 50-point threshold that separates expansion from contraction in the manufacturing sector. The PMI has now been in contractionary territory for ten consecutive months.
In January, output, new orders and employment all moderated. New export orders were broadly flat, while input cost inflation eased for the fourth straight month, likely thanks to a more stable exchange rate. This enabled producers to cut output prices in an effort to boost demand.
According to Andrew Harker, Associate Director at IHS Markit: “While output price discounting is helping to soften the slowdown in new orders, business conditions clearly remained challenging for Turkish manufacturers at the start of 2019”.
Central Bank figures showed that the manufacturing sector’s capacity utilization rate ticked up slightly to 74.4% in January from 74.1% in the prior month, but remained depressed compared to the values observed in late 2017 and early 2018, when the economy was in the midst of a stimulus-driven boom.
Author: Oliver Reynolds, Economist