Cover chart: SAMEKS composite Index in Turkish
In May 2020, seasonally and calendar adjusted SAMEKS Composite PMI Index increased by 11.8 points to 45.7 compared to the previous month. SAMEKS, or sometimes referred to as PUMAKS, is compiled by center-right business organization MUSIAD and has the advantage of including Turkey’s large service industry. The HIS Markit-Istanbul Chamber of Industry PMI covers only manufacturing.
While the increase in the industry index reached 19.7 points to 47.9 in May compared to the previous month, the service sector index increased by only 7.0 points to 43.9.
MUSIAD commented on SAMEKS results as follows:
A rapid expansion in input purchases were observed in both sectors. Accordingly, production in the industry sector and business volume in the service sector have accelerated significantly. With these positive developments, the Index rapidly moved away the worst level in its history observed in April. On the other hand, the SAMEKS Composite Index, which signaled that the recovery process in the real sector gained momentum by increasing 11.8 points compared to the previous month, continued to remain below 50 reference value in May, which indicates that the shrinkage in economic activity which started in March continued.
Industry Sector SAMEKS Index
The seasonally and calendar adjusted SAMEKS Industry Sector Index increased by 19.7 points in May to reach 47.9. In this period, new orders rose by 27.6 points to 47.2 compared to the previous month, which drove the recovery observed in the industrial sector. Additionally, input purchases for the sector gained momentum by 23.2 points compared to the previous month, reaching 52.0. In this period, the decline in the final goods stocks for the sector also slowed down, with the sub-index, increasing by 8.0 points compared to the previous month, to 44.2. In May, a relative recovery was observed in the labor demands of firms operating in the industrial sector, and the sub-index in question increased by 3.9 points compared to the previous month and reached 43.3. Due to these developments, the production sub-index increased by 27.7 points compared to the previous month to 45.8. Thus, the SAMEKS Industry Sector Index, adjusted for season and calendar effects, increased by 19.7 points compared to the previous month, indicating a substantial recovery is in progress.
Service Industry SAMEKS Index
Seasonally and calendar adjusted SAMEKS Service Sector Index increased by 7.0 points to 43.9 in May 2020 compared to the previous month. In this period, the input purchases sub-index, which increased by 19.7 points compared to the previous month to 51.7, played a decisive role in the rapid rise of the service sector index. Due to the increase in purchases, the business volume for the sector increased by 10.1 points compared to the previous month to 40.3 points. Despite an increase of 1.8 points compared to the previous month, the delivery time sub-index of the suppliers, which was 44.5, indicates that the problems observed in the procurement of goods and services of the companies operating in the sector continue. Despite the recovery observed throughout the sector, the decrease in labor demand continued throughout May as well, with the employment sub-index decreasing by 6.6 points to 43.0 points compared to the previous month. Thus, the SAMEKS Service Sector Index, adjusted for season and calendar effects, increased by 7.0 points in May 2020 to 43.9.
The crisis caused by Covid-19 pandemic is resonating in all aspects of the global economy. Through both supply and demand channels, it is also hitting Turkey’s economy, though the impact has moderated relatively as of May. In this period, increases in manufacturing industry capacity utilization, real sector confidence index and sectoral confidence indices were observed, while SAMEKS, which moved away from its historical bottom rapidly. All of these indicators confirm the recovery in the real sector. The positive effects of government supports and incentives received by the economy exceeding TL 260 billion are becoming more evident in the normalization process that will start in June and afterwards. This trend of recovery is expected to become more pronounced in the second half of the year, as Turkey’s economic activity is projected to turn positive quickly.
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