Turkey: Manufacturing sector operating conditions improve at markedly softer pace in April
The Istanbul Chamber of Industry Turkey Purchasing Managers’ Index (PMI) dropped to 50.4 in April from 52.6 in March. However, the index remained above the neutral 50-threshold that separates an overall expansion from contraction in business activity for the 10th month running.
April’s print reflected the impact of a new wave of Covid-19 cases, affecting output and new orders. The slowdown in new orders growth was due to weaker demand dynamics at home as foreign new business inflows rose for the fourth month running. Despite the impact on output and new orders, firms continued to onboard staff for the 11th month in a row. This, in combination with softer new business inflows, resulted in the strongest fall in backlogs of work since May last year. Turning to prices, inflationary pressures remained elevated amid rising input costs due to lira weakness and higher prices for raw materials. Greater cost burdens were passed on to customer in the form of higher output prices.
Andrew Harker, economics director at IHS Markit, commented:
“There were some positive signs, however, as both new export orders and employment continued to rise. “Performance in the months to come will likely depend on how quickly infections come down, helping the sector to operate in a more normal environment.”