Turkey: PMI falls again in July as the manufacturing sector remains in a tough spot
August 1, 2019
Operating conditions in the Turkish manufacturing sector deteriorated at an accelerated pace in July, with the Istanbul Chamber of Industry and IHS Markit’s manufacturing Purchasing Managers’ Index (PMI) dropping from 47.9 in June to 46.7 in July. Business conditions in the manufacturing sector have now worsened for nearly a year-and-half.
The latest downtick in the PMI came amid mixed signals. Manufacturing output continued to drop, albeit at the softest pace in four months : Stable export orders offset domestic demand weakness. However, as production fell again, employment and purchasing activity were scaled back, while the latter subsequently helped shorten suppliers’ delivery times for the first time in over two years. Reduced output needs likely led to easing inflationary pressures; input price pressures moderated for the second month in a row and was below the series average, while output price inflation moderated to five-month low.
The drop in operating conditions was further highlighted by the Central Bank’s capacity utilization rate for the manufacturing sector, which fell to 76.2% from 77.1% in June—all sectors saw a moderation in their capacity utilization rates.
Author: Jan Lammersen, Economist