Turkey: Manufacturing sector operating conditions deteriorate in May
The Istanbul Chamber of Industry Turkey Purchasing Managers’ Index (PMI) dropped to 49.3 in May from 50.4 in April. As such, the index moved south of the neutral 50-threshold that separates an overall contraction from improvement in business activity for the first time in nearly a year.
The deterioration in May was largely owing to the impact of lockdown measures driving a slowdown in output and new orders, while price pressures continued to build More positively, firms raised their payroll numbers again in the month albeit at the weakest pace in a year, impacted by restrictive measures. Meanwhile, supply chain issues persisted owing to difficulties in obtaining raw materials. Input prices rose as a consequence, while continued currency weakness further affected cost burdens. Output prices were raised in response.
Andrew Harker, economics director at IHS Markit, commented:
“Firms will be hoping that the lockdown had the desired effect in bringing infections under control, and that a swift return to growth will be seen now that measures have started to ease. Less transitory seem to be the problems in supply chains, which remained widespread in May and contributed to strong inflationary pressures.”