Turkey: PMI drops again in August, but by a lesser degree than in July
September 2, 2019
Operating conditions in the Turkish manufacturing sector deteriorated at a less severe pace in August than in July, with the Istanbul Chamber of Industry and IHS Markit’s manufacturing Purchasing Managers’ Index (PMI) rising to 48.0 from 46.7. The index thus remained below the 50-threshold that separates expansion from contraction in the manufacturing sector and business conditions have now worsened for nearly one-and-a-half years.
New orders decreased in August, which pushed overall output into another contraction in the month, although new orders fell at the slowest pace in 17 months. In line with this, purchasing activity and inventories were both scaled back in August, but not as much as in July. Employment levels were broadly stable in August, after 12 months of reduction. In terms of prices, input inflation slowed to the weakest rate since September 2016 in August, which led output price inflation to ease for the third consecutive month.
The less severe moderation in operating conditions in August was highlighted by the Central Bank’s capacity utilization rate for the manufacturing sector, which rose to 76.6% from 76.2% in July.
Author: Edward Gardner, Economist