Turkey: Manufacturing PMI stays deep in contractionary territory in December
January 2, 2019
The Purchasing Managers’ Index (PMI), produced by the Istanbul Chamber of Industry (ICI) and IHS Markit, decreased from 44.7 in November to 44.2 in December. As a result, the index moved further below the crucial 50-point threshold that separates expansion from contraction in the manufacturing sector. The PMI has now been in contractionary territory for nine consecutive months.
In December, output, new orders, new exports and employment all moderated. More encouragingly, input cost inflation eased further, supported by the recovery in the lira. This enabled producers to cut output prices in an effort to boost demand. Further downward pressure on output prices likely came from the government’s anti-inflation campaign, which has seen some firms offer temporary price discounts.
According to Andrew Harker, Associate Director at IHS Markit: “Turkish manufacturers continued to experience difficult market conditions at the end of 2018, despite recent signs of stabilization.”
In line with lower manufacturing output, Central Bank figures showed that the manufacturing sector’s capacity utilization rate remained at a multi-year low of 74.1% in December.
Turkey Fixed Investment Forecast
FocusEconomics Consensus Forecast participants expect fixed investment to decline 5.8% in 2019 and to expand 3.7% in 2020.
Author: Oliver Reynolds, Economist