The calendar adjusted industrial production index fell 0.1% y/y in August after increasing 4.7% y/y in July. This was the first contraction in industrial output, measured on a calendar adjusted basis, since December 2012 when the index was down 1.8% y/y.

This year’s average output growth -calculated on a calendar adjusted basis- slowed to 2.6% y/y in August from 3% y/y in July.

In unadjusted terms, industrial production contracted 1.3% y/y in August whereas the markets had expected an output increase of 3% y/y. In July, the unadjusted industrial production index rose 5.9% y/y. Calculated in unadjusted terms, this year’s average output growth was 2.3% in August, easing from 2.8% in July.

The seasonally & calendar adjusted industrial output index fell 4% m/m in August, the sharpest decline in years, the statistics institute (TUIK) also said. The seasonally & calendar adjusted index rose 0.7% m/m in the previous month.

On a calendar-adjusted basis; manufacturing output grew only 0.6% y/y (6.3% y/y increase was recorded in July), mining output contracted a sharp 7.2% y/y and utilities sector’s output was down 0.7% y/y. The pace of output growth in durable consumer goods industry eased to 0.8% y/y in August from 6.8% y/y in the previous month. Intermediate goods sector’s production fell 0.8% y/y after increasing 6.3% y/y in July. Energy output contracted 3.7% y/y that followed a 2.2% y/y decline in July. The output growth of the capital goods sector decelerated to 6.8% y/y from 9.1% y/y while, on a monthly basis (measured by the seasonally & calendar adjusted index), the sector’s production fell 5.8%.

On an unadjusted basis, manufacturing production contracted 0.9% y/y in August after the sector registered an output increase of 7.8% y/y in the previous month.

August’s industrial production data is disappointing. Some early indicators for manufacturing activity, the driving force behind the overall industrial production, are sending mixed signals. Recall that the headline PMI registered 54.0 in September, up from 50.9 in August. Turkish manufacturers reported sharp rises in output levels and order intakes in September, with the rates of expansion accelerating to the quickest since January. But, the manufacturing capacity utilisation rate edged down to 75.4% in September from 75.5% in August.