According to the Istanbul Chamber of Industry (ISO) Manufacturing Purchasing Managers’ Index (PMI) for October 2023, the PMI fell to 48.4, the lowest level of the year, down from 49.6 in September 2023. The primary reason for this decline was the sharpest slowdown in new orders in nearly a year, which has led to a renewed downward trend in employment. With the slowing economy, inflationary pressures have eased.
According to the Istanbul Chamber of Industry Turkey Sectoral PMI report for October, production increased in only two of the ten sectors monitored, while employment decreased in most sectors. On the other hand, input costs and final product prices inflation continued their recent trend, slowing down in most sectors.
Manufacturers reported weak domestic and international demand in October. As a result, total new orders and new export orders lost momentum. The slowdown in total new orders was the highest since November of last year. As a result of this trend in new orders, production continued to decline in October. Thus, a loss of momentum in production was observed for four consecutive months.
The slowing economy has been helping ease inflationary pressures
In October, employment decreased again, ending a five-month expansion period. Survey participants highlighted resignations and retirements. Despite the decrease in the number of employees, firms recorded the fastest decline in backlogs in nearly a year. Due to the reduction in order requirements, manufacturers also reduced their input and final product inventories. Inflationary pressures continued to ease in the early fourth quarter. The rates of increase in input costs and final product prices decreased for the third consecutive month. Companies that reported price increases mostly attributed it to the depreciation of the Turkish lira.
S&P Global Market Intelligence’s Director of Economics, Andrew Harker, commented on the Istanbul Chamber of Industry Turkey Manufacturing PMI data, saying, “Demand conditions were the main factor slowing down the Turkish manufacturing sector in October, as firms struggled to secure new orders in volumes that would support production and maintain employment levels. On the other hand, the continuing easing of inflation pressures may provide some optimism about the possibility of a more favorable demand environment in the near term.”