The January PMI data for the Turkish manufacturing sector weakening to 50,5 showed the slowing production, easing export orders amidst rising inflationary forces that create pricing difficulties. The employment creation appears strong though weakest of the past 20 months’ surging pace.
Below is the PMI note released today:
Input costs and output prices continued to rise sharply, albeit at softer rates than the records seen at the end of last year. This led to challenges for firms to secure new work, contributing to moderations in new orders and production. More positively, employment continued to rise.
The headline PMI posted above the 50.0 no-change mark in January thanks to contributions from the
employment and suppliers’ delivery times indices.
That said, at 50.5 the latest reading was down from 52.1 in December and the lowest in eight months. As has been the case in recent months, Turkish manufacturers highlighted strong inflationary pressures, often due to weakness of the Turkish lira.
Input costs continued to rise at a steep pace at the start of the year, although the rate of inflation slowed from the survey record posted in December. This was also the case with regards to selling prices, which increased at a much softer pace but one that was still well above the series average.
Ongoing price pressures meant that firms continued to face challenges securing new orders, leading total new business to moderate for the fourth successive month. New export orders also slowed in January, ending a seven-month sequence of growth.
With new orders easing, firms scaled back their production and purchasing activity, in both cases for the second month running. There was also a lack of pressure on capacity, and backlogs of work were
reduced further.
Although workloads eased, manufacturers continued to increase their staffing levels amid some reports that new workers had been hired as part of investment plans. Employment has now risen in
each of the past 20 months, although the rate of job creation was the softest in this sequence.
Difficulties around the sourcing of raw materials, logistics and price rises all contributed to a further lengthening of suppliers’ delivery times, although data suggested that disruption was much less pronounced than in December.
Finally, inventories of both purchases and finished goods were scaled back at the start of the year.
Commenting on the Istanbul Chamber of Industry Turkey Manufacturing PMI survey data, Andrew Harker, Economics Director at IHS Markit, said:
“The new year began very much as the old one ended, with Turkish manufacturers continuing to face the challenges of operating in an inflationary environment. There were, however, some signs of pressures beginning to ease, something which firms will hope continues over the rest of the first quarter to help them in the hunt for new business.”