The rebound in the Turkish manufacturing PMI has continued with a return to growth territory. The headline PMI rose back above the 50.0 nochange mark for the first time since February during June, posting 53.9 up from 40.9 in May. The lowest level since the 2009 financial crisis was seen in April at 33.4.
A return to near-normality amid the lifting of COVID-19 restrictions enabled manufacturers to expand their production volumes at a marked pace during June, thereby ending a three-month period of moderation.
The details show higher output and new orders; higher input prices with respect to currency weakness and the start of hiring in the manufacturing sector with the easing of lock-down measures and return of economic activity.
The rise in debit and credit card expenditures, the bounce in confidence indicators and a gradual increase in electricity consumption show that the economic activity is gaining momentum.
Higher input costs were often passed on to customers in the form of increased selling prices. Output charges were up sharply, and at the fastest pace in three months. June inflation will be announced at 10:00 AM Turkey time on 3rd of July with the market call averaging to slightly above 12%. In fact, citing elevated momentum on inflation (with the core inflation above 10%) the central bank of Turkey halted its immense easing cycle at its June meeting.
In fact President Erdogan claimed that Turkey would surprise the world with a very successful growth performance this year. Looking forward, the labor market dynamics, whether investment appetite will recover alongside the betterment in capacity utilization, and the economic recovery performance in Turkey’s key export markets -the EU- will set the pace of economic activity in the months ahead.
Commenting on the Istanbul Chamber of Industry Turkey Manufacturing PMI survey data, Andrew Harker, Economics Director at IHS Markit, said: “The recovery in the Turkish manufacturing sector gathered momentum in June, with a number of the variables from the survey back in expansion mode. The severity of the COVID-19 downturn was such, however, that much more will be needed in coming months to recover the output lost during the worst of the pandemic. We would hope therefore to see growth strengthen further in the months ahead.”