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Turkey PMI June 2021

Turkey: Operating conditions improve in June

The Istanbul Chamber of Industry Turkey Purchasing Managers’ Index (PMI) rose from 49.3 in May to 51.3 in June. As such, the index moved north of the neutral 50-threshold that separates an overall improvement from contraction.

The headline improvement was driven by a return to growth in output and new orders, as restrictions were eased in the months and spurred demand. Demand was driven by both domestic and international clients, with new business from abroad rising at the fastest pace since January. On the other hand, global supply-side issues weighed on the sector as firms faced difficulties securing raw materials, thereby limiting output growth; suppliers’ delivery times lengthened notably again in the month, albeit at the softest rate in nearly a year. Supply bottlenecks also dragged on purchasing activity, while stocks of finished goods dropped as manufacturers relied on inventories to help fulfill orders. Greater demand, meanwhile, drove an uptick in job creation, with employment rising for the 13th month running. Turning to prices, input cost inflation rose to a six-month high due to currency weakness and higher costs for raw materials amid shortages. Consequently, output price inflation rose at the strongest pace since September 2018.

Andrew Harker, economics director at IHS Markit, commented:

“There were some suggestions that growth could have been even stronger were it not for the ongoing difficulties in sourcing raw materials, with firms struggling to build input inventories and having to dip into stocks of finished goods to help fulfil new orders.”

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