The latest PMI® survey data from Istanbul Chamber of Industry and S&P Global pointed to a challenging demand environment in the Turkish manufacturing sector. New orders, output and purchasing activity all softened, with continued job creation the main positive. Meanwhile, rates of input cost and output price inflation remained sharp.
At 48.1 in June, down from 49.2 in May, the headline PMI signalled a moderation in the health of the Turkish manufacturing sector, and one that was the most marked since the initial wave of the COVID-19 pandemic in early-2020. Business conditions have now softened in four successive months.
Price rises and challenging economic conditions contributed to a weaker demand environment at the end of the second quarter, with both output and new orders moderating as a result. In both cases, the slowdowns were more pronounced than seen in May.
Employment remained a bright spot within the latest results, with firms continuing to expand their staffing levels. That said, the rate of job creation was the second-softest in the current 25-month sequence of rising workforce numbers.
Firms scaled back their purchasing activity again, however, in line with softer new order inflows.
Steep inflationary pressures were recorded in June, with both input costs and output prices rising more quickly than the respective series averages.
According to respondents, higher input prices reflected rising raw material costs, increased energy charges and unfavourable exchange rates. In turn, firms raised their own selling prices sharply, albeit at the softest pace since September last year.
Raw material shortages contributed to a further lengthening of suppliers’ delivery times. Although more pronounced than seen in May, the extent of supply-chain disruption was again much weaker
than during the worst of the recent delays.
Commenting on the Istanbul Chamber of Industry Türkiye Manufacturing PMI survey data, Andrew
Harker, Economics Director at S&P Global Market Intelligence, said:
“Turkish manufacturers are facing a challenging market environment at present, with price rises and demand weakness combining to lead to softer new orders and a scaling back of production. “Increases in employment were again the main positive, although even here the rate of job creation was among the softest in the past two years. The months ahead seem likely to continue to prove
challenging for firms.”