Turkey’s headline PMI was unchanged at 49.2 in May. The reading signalled a third successive moderation in the health of the manufacturing sector, albeit one that remained only marginal. The Turkish manufacturing sector remained subdued in May amid muted customer demand and ongoing price pressures. That said, supply-chain disruption and rates of inflation eased over the month and firms continued to expand their workforce numbers.
Both output and new orders slowed during May, extending the current periods of easing to six and eight months respectively as customer demand remained subdued. In both cases, however, there were tentative signs of improvement as rates of moderation softened. Meanwhile, new export orders eased to the greatest extent in two years, with some firms highlighting an economic slowdown in Europe.
Manufacturers continued to raise employment as part of efforts to expand capacity. Staffing levels were up for the twenty-fourth month running, albeit modestly.
With new orders slowing and employment continuing to rise, firms were able to reduce backlogs of work again in May. Meanwhile, subdued new order inflows contributed to stockbuilding. Stocks of purchases increased for the first time in six months, while a rise in stocks of finished goods ended an eightmonth period of depletion. In fact, the accumulation of post-production inventories was the most marked since September 2015.
There were further signs of inflationary pressures easing midway through the second quarter. While
input costs increased sharply amid rising raw material prices and exchange rate fluctuations, the
rate of inflation eased for the fifth month in a row to the softest since February 2021. A slower rise in
output prices was also signalled.
Supply-chain disruption also eased, with the latest deterioration in vendor performance much less pronounced than that seen in April and the least marked overall since September 2020.
Economics Director at S&P Global Market Intelligence, said: “Demand in the Turkish manufacturing sector remained subdued in May amid the familiar headwinds we’ve seen in recent months, with firms also struggling to secure export business amid an economic slowdown in Europe. That said, there were some signs that doing business might start to get easier soon. In particular, supply chain constraints were the least pronounced since September 2020, while cost inflation eased for the fifth month running. A sustained period of job creation means that firms will be ready should these tentative improvements result in renewed order growth.”