November data extends Turkey’s worst-on-record retail sales contraction

November data extends Turkey’s worst-on-record retail sales contraction
By Akin Nazli in Belgrade January 15, 2019

Turkey's calendar-adjusted retail sales volume index declined by 6.3% y/y in November, extending its longest annual contraction period on record to three months, national statistics office TUIK reported on January 15.

October’s 7.4% y/y (revised) retail sales contraction marked the biggest annual contraction since the data set was first compiled in 2010. The previous contraction of 2.9% y/y (revised) in September was the first decrease seen since February 2017. It was also recorded as the most extensive until the October data arrived, reinforcing the widespread perception that Turkey is heading into a recession in the wake of its currency crisis.

October’s non-food sales sank by 10% y/y while the month’s automotive fuel sales declined by 7.1% y/y. Food, drinks and tobacco sales, on the other hand, grew 1.4% y/y.

Average monthly annual retail sales growth declined to 0.6% in Q3 from 5.9% in Q2 and 8.9% in Q1 2018, according to TUIK’s retail sales data.

Real private consumption growth declined to 1.1% y/y in Q3 from 6.4% y/y in Q2 and 9.1% in Q1 while private consumption’s share in Turkey’s overall GDP based on current prices also declined. It hit a historically low level of 56% in Q3, moving down from 59% in Q2 and 60% in Q1, according to the latest GDP data.

Consumer confidence declines
Turkey’s consumer confidence index declined by 2.3% m/m to 58.2 in December after gaining 4% m/m to 59.6 in November, data released by TUIK showed on December 28. The 57.3 reading recorded in October was the lowest level seen since December 2008.

The retail confidence index moved up further by 6.3% m/m to 96.4 in December after rising 4.3% m/m to 90.7 in November. October saw a record low level of 87.

TUIK also announced on January 15 that the unemployment rate reached 11.6% in October, the highest level registered since March 2017, with the youth unemployment rate standing at 22.3%.

According to TUIK data, the number of people in the Turkish population of around 81mn who are older than 15-years-old stood at 60.8mn as of October while the statistics office added that it had calculated the labour force at 32.7mn. Of those people, 28.9mn are employed, including 5.3mn people in agriculture.

Public sector employment grew by 20% y/y to 4.3mn people as of Q3, according to the latest data available from TUIK.

Construction hit first
Ozlem Bayraktar Goksen of Tacirler Invest said in a research note on October unemployment figures: “The deterioration in activity first had a negative impact on construction sector employment since unregistered employment is high in this sector. The share in unregistered employment in the services sector is also high which implies that in the coming period the decelerating economic activity would weigh on the services sector. However, the strong performance of the tourism sector as well as the help of the government incentives might play a constructive role in this sector.

“The share of unregistered employment in the industrial sector is rather limited, rendering layoffs rather costly. As per the leading factors, the capacity utilization rate has been following a decreasing pattern which would be followed by the unemployment rates. Moreover, the expectations for the number of unemployed continued to worsen further. The related sub-index declined to 63 in December compared to 75 registered in August, underlining a sharp fall of 16% since then.” 

Also on January 15, the central government released the 2018 budget figures. They showed that the budget deficit grew by 52% y/y to TRY73bn in 2018 while tax revenues rose by a limited 16% y/y to TRY621bn, marking another sign of deteriorating economic activity. End-2018 inflation was announced at 20.3% y/y by TUIK.

Data

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