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Turkish Manufacturing PMI Declines for 3rd Straight Month, Signals Deepening Industrial Slowdown

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Turkey’s manufacturing sector continued to contract in July, with the Istanbul Chamber of Industry’s (ISO) Turkey Manufacturing PMI falling to 45.9, marking the lowest reading since October 2024. According to S&P Global’s report, July 2025 marks the 16th consecutive month of deteriorating business conditions in Turkish manufacturing, driven largely by stagnant domestic and foreign demand.

Persistent Weakness in Demand Pressures Production

The headline PMI dropped from 46.7 in June to 45.9 in July, remaining below the neutral 50.0 threshold for the third month in a row. One of the most notable findings from the latest survey was the continued slump in customer demand, leading to the 25th consecutive monthly decline in new orders, with the steepest drop since March 2025.

  • Export orders also contracted, reflecting ongoing weakness in foreign markets.

  • The sharp decline in new business prompted firms to cut production at the fastest pace in 10 months.

  • Employment and purchasing activity also slowed, while stocks of inputs and finished goods declined, the latter reversing a mild uptick seen in June.

Inventory Reductions & Supplier Improvements

Due to weakened demand, manufacturers focused on reducing inventories, resulting in the sharpest fall in input stocks since October 2024. Delivery times shortened for the fourth time in five months, as reduced pressure on supply chains allowed suppliers to speed up deliveries.

Despite ongoing depreciation of the Turkish lira, input costs continued to rise sharply, although cost inflation slowed to its lowest pace in 2025. Output price inflation slightly accelerated in July, yet some firms lowered prices to counter weak demand, keeping price growth moderate overall.

S&P Global’s Assessment: A Bleak Outlook

Andrew Harker, Economics Director at S&P Global Market Intelligence, commented:

“Widespread difficulties in securing new work severely limited positive developments in July. Production, employment, and purchasing activities were all cut, and firms focused on inventory reduction. The weakening lira further inflated input costs. Manufacturers now look toward demand recovery in the second half of the year.”

Sector-Specific PMI Findings: July 2025

According to the ISO Turkey Sectoral PMI Report, all 10 monitored sectors saw new orders decline, underscoring broad-based demand weakness. Only the electrical & electronics sector recorded output growth — the first increase in 17 months. In contrast, the food sector posted its steepest decline since May 2020.

Key Sector Highlights:

  • Production: Grew only in the electrical/electronics sector; all others saw contraction.

  • New Orders: Declined across all sectors, including textiles and machinery.

  • Exports: A limited boost was observed in wood/paper and apparel/leather sectors.

  • Employment: Increased only in the food sector; fell elsewhere, marking the weakest performance in 10 months.

  • Purchasing Activity: Decreased across the board.

  • Supplier Deliveries: Improved in 7 sectors, especially in wood and paper.

  • Input Cost Inflation: Continued but softened in 6 out of 10 sectors.

  • Final Goods Prices: Rose in most sectors; the electrical/electronics sector saw the fastest increase since September 2024.

  • Textiles: Remained the only sector to report a fifth straight month of falling output prices.

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