Turkey: Operating conditions continue to worsen in May, albeit at a milder pace
June 1, 2020
Business conditions in Turkey’s manufacturing sector continued to deteriorate in May, albeit at a softer pace compared to the prior month, with the Istanbul Chamber of Industry Turkey Purchasing Managers’ Index (PMI) rising to 40.9 from 33.4 in April. Despite the uptick, the headline print remained firmly entrenched below the neutral 50-threshold that signals an overall decrease from the prior month.
The increase in the headline figure reflected softer falls in output and new orders, with the pandemic continuing to hamper demand. Consequently, employment dropped; however, the drop was much less steep than for output and new orders, and the majority of firms reported unchanged staff levels. Weakened demand drove a decline in purchasing activity and stocks of finished goods. Turning to prices, input costs rose on the back of lingering lira weakness, with the rate of inflation rising to the fastest in a year. As such, output prices were raised at an accelerated pace.
While the latest data paints a fairly grim picture for the economy in the second quarter, Andrew Harker, economics director at IHS Markit, commented: “Rates of moderation softened, however, suggesting that the sector is on the road to recovery. As long as the virus continues to be brought under control […] the move back to growth should follow in the months ahead.”
Author: Jan Lammersen, Economist