According to official stats agency Turkstat data, the unemployment rate increased by 0.4 points in November to reach 9 percent in seasonally adjusted terms. While the unemployment rate in the young population was 16.5 percent, broadly defined unemployment increased by 1.3 points compared to the previous month, rising to 22.7 percent. Thus, unemployment increased for the first time since June.
Industrial production declines sharply on Y/Y basis
While industrial production in Turkey decreased by 1.4 percent in November compared to the previous month, it increased by 0.2 percent compared to the same month of the previous year. The monthly contraction series increased to the 5th month and was the longest series since 2018.
On an annual basis, in November, the mining and quarrying sector index decreased by 4.5 percent, the manufacturing industry index decreased by 1.3 percent and the electricity, gas, steam and air conditioning production and distribution sector index decreased by 1 percent compared to the previous month.
Commentary
Unemployment is expected to increase throughout the winter months, while a recovery in industrial production will have to await stronger data from the European economy. Businesses are shedding labor as external demand declines. The domestic demand is still perceived as strong, judging by shopping center turnover data rising by 92% Y/Y, which is inflationary.
Turkish GDP will have most likely registered a small contraction Q/Q in 4Q2023. However, the 50% across-the-board hike for minimum wage and civil service salary and wages ought to boost domestic demand in 1Q2024.
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