Confidence Indices reflect mixed signals

Seasonally adjusted confidence index increased by 2.9% in services sector, while decreased 0.1% in retail trade sector and 5.2% in construction sector in January 2021 compared to the December 2020.

The puzzling message comes from the recovery in the services sector confidence index when in fact the COVID-19 related curfew measures have been weighing mostly on the service sector in Turkey; just as on a global scale. The rolling out of the vaccination process in Turkey must have been added optimism for the future months of 2021. The drops in the retail and construction confidence indices on the other hand are no surprise given the spike in Turkey’s interest rates that is slowing down domestic demand.

Looking forward, the expected ease of curfew measures in the services sector starting from March-April is likely to give a boost to the confidence indices.  The same period will coincide with Turkey’s tangible contact with the EU and the US administrations in an effort to attract investments and avert any form of sanctions on Turkey; which if positively unveils will inject further optimism.

Seasonally adjusted sectoral confidence indices, January 2021

Seasonally adjusted confidence index which was 99.0 for services in December 2020 increased by 2.9% in January 2021 to 101.9. In services sector compared to the previous month, business situation over past three months sub-index increased by 5.4% to 103.0. Demand-turnover over past three months sub-index increased by 1.4% to 98.0 and demand-turnover expectation over next three months sub-index increased by 2.1% to 104.6.

Seasonally adjusted retail trade confidence index decreased by 0.1% in January 2021 to 108.5. In retail trade sector compared to the previous month, business activity-sales over past three months sub-index decreased by 3.7% to 118.8. Current volume of stock sub-index decreased by 1.4% to 90.1 and business activity-sales expectation over next three months sub-index increased by 4.9% to 116.7.

Seasonally adjusted construction confidence index which was 88.8 in December 2020 decreased by 5.2% in January 2021 to 84.2. In construction sector compared to the previous month, current overall order books sub-index became 75.7 by decreasing 2.5%. Total employment expectation over next three months sub-index decreased by 7.4% to 92.6.

Seasonally adjusted sectoral confidence indices, sub-indices and the rate of changes, January 2021