Turkey's April Manufacturing PMI encouraging despite slight sag

Turkey's April Manufacturing PMI encouraging despite slight sag
By bne IntelliNews May 2, 2017

Turkey's Manufacturing Purchasing Managers' Index (PMI) slightly declined to 51.7 in April from 52.3 in March, the highest level recorded since February 2014, IHS Markit said on May 2.

Any PMI figure higher than 50 points denotes overall expansion in the manufacturing sector. In March, the PMI score registered one of the largest monthly increases in the 12-year history of the survey. The April figure can be presented as the second-highest level since December 2015 despite the slight monthly decline.

“Buoyed by solid growth rates signalled for output, new orders and exports, manufacturers expanded their workforces and purchasing activity,” Trevor Balchin, a senior economist at IHS Markit, said in comments on the April survey of Turkish manufacturing.

The PMI also remained above its long-run trend level of 50.7 in April, signalling further solid overall improvement in manufacturing operating conditions. Output, new orders, exports, purchasing and employment continued to grow in the month, the survey also showed.

The growth in the volume of new orders slowed slightly compared to March but was nevertheless the third strongest recorded in the past three years. Output growth was the second-highest in the three years despite edging down compared to March. New export orders rose for the fourth consecutive month in April.

The survey also pointed to a further weakening in inflationary pressures on producer prices. Input price inflation fell to a six-month low, according to the survey.

Annual inflation in domestic producer prices shot to a 9-year high of 16.09% in March, fuelling concerns over the further escalation of CPI inflation from 11.29% in the month, the highest level registered since October 2008, according to the latest inflation figures published by the statistics office TUIK.

According to other latest data published by TUIK, Turkey’s calendar-adjusted industrial production index moved up by 1% y/y in February, marking the fifth consecutive rise. Economists had expected the adjusted index to increase by 3% y/y in February.

The February industrial production figures were disappointing, but the latest PMI figures for March and April indicate that the economy may still be on the mend.

Turkey’s GDP growth picked up to 3.5% y/y in the fourth quarter of 2016.

Calendar-adjusted Industrial Production Growth by Main Industrial Groups (y/y, %)
  Aug Sep Oct Nov Dec 2016 Jan Feb
Total Industry 2.0 -2.9 2.2 2.6 1.6 1.8 2.6 1.0
Intermediate Goods 1.2 -1.4 0.4 -0.5 -3.7 0.3 -3.5 -3.4
Durable Consumer Goods 1.3 -9.4 -9.5 0.0 -5.4 -3.2 2.0 5.8
Non-durable Consumer Goods 6.2 -6.4 4.1 0.8 6.7 3.1 1.1 -0.9
Energy 4.6 0.1 5.7 8.2 3.2 4.8 6.9 7.4
Capital Goods -4.4 -2.1 3.8 7.3 5.0 2.1 12.9 5.5
Source: tuik