May brings better sentiment in Turkish service, retail, construction industries

May brings better sentiment in Turkish service, retail, construction industries
By bne IntelliNews May 23, 2017

The seasonally-adjusted business sentiment indices for Turkey's service, retail and construction industries have improved on a monthly basis in May, statistics office TUIK announced on May 23 while releasing the results of its monthly sectoral confidence survey.

Turkey's confidence indicators are still under political pressure despite Turkish President Recep Tayyip Erdogan officially claiming a narrow victory in the April 16 referendum on shifting to an executive presidency. Domestic and regional tensions are still being generated by the Syria and domestic Kurdish crises.

Investors are demanding that the new Erdogan-led government delivers long-delayed and much-needed economic reforms that will restore the kind of investor confidence key to putting the economy on a more sustainable growth path. However, expectations are still mainly focused on a possible snap general election poll.

The seasonally-adjusted confidence index for the construction sector rose by 0.8% m/m in May, following a 0.2% decline in April, TUIK data also showed on May 23. Despite the slight recovery in May, the index value for construction confidence is still well below the 100-mark which separates optimism from pessimism.

Retail confidence in May also improved on a monthly basis for the fourth month in a row. The seasonally-adjusted retail confidence index rose 1.1% m/m, slowing from the strong 4.1% m/m gain registered a month ago.

Turkish retailers have been recorded as optimistic in the last two months following a run of pessimism running from September 2016 to March.

The turnover index for shopping malls in Turkey rose 5.5% y/y in Q1 despite a 2.8% y/y decline in the index measuring the number of visits. Meanwhile, Turkey's calendar-adjusted retail sales volume index fell by 0.4% y/y in March after declining 4.4% in February.

Annual retail sales growth slowed to 0.7% in 2016 from 3.6% in 2015.

The service industry’s seasonally-adjusted confidence index also rose by 2.1% m/m in May, following a 3% m/m rise in April. The industry switched to optimism in May for the first time since July 2016. 

Turkey's consumer confidence index improved by 2.1% m/m to reach 72.8 in May, the highest level recorded since October last year. The consumer confidence index has shown an improvement in each of the three months since February.

The OECD is forecasting that private final consumption growth in Turkey will decline to 3% in 2017 from 4.1% in 2016.

Seasonally-adjusted sectoral confidence indices in Turkey
  Apr May m/m, Apr m/m, May
Services Confidence 99.9 102.0 3.0% 2.1%
Business Situation (past 3-months) 95.8 98.4 5.0% 2.7%
Demand-turnover (past 3-months) 94.5 97.1 3.3% 2.8%
Demand-turnover (next 3-months) 109.3 110.3 1.1% 0.9%
Retail Trade Confidence 101.6 102.8 4.1% 1.1%
Sales (past 3-months) 97.6 97.8 7.2% 0.2%
Stock Volume 99.7 97.9 -1.6% -1.7%
Sales (next 3-months) 107.6 112.6 7.0% 4.6%
Construction confidence 85.7 86.3 -0.2% 0.8%
Order books 70.9 70.6 -0.1% -0.5%
Employment (next 3-months) 100.4 102.1 -0.2% 1.6%
source: tuik