Turkey: Manufacturing PMI signals greater deterioration in July
The ICI Manufacturing Purchasing Managers’ Index (PMI) dropped from 48.1 in June to 46.9 in July, the lowest print since May 2020. The index consequently moved further below the neutral 50-threshold to signal a stronger deterioration in business conditions compared to the prior month.
The headline deterioration was driven by weaker demand affecting output and new orders, exacerbated by an uncertain economic backdrop and sky-high inflation. Demand and output cooled to the greatest extent since the onset of the Covid-19 pandemic. That said, foreign demand was largely unchanged, likely due to the weak Turkish lira. Turning to employment, firms continued to increase their headcount, although the pace of expansion eased to a 26-month low. Regarding prices, input price inflation rose steeply due to a weakened lira, but the pace of increase was the softest since February 2021. Consequently, output price inflation eased to the weakest in nearly 18 months.
Andrew Harker, economics director at S&P Global, commented:
“Reduced price pressures may provide some opportunities for firms to entice customers back in the months ahead.”