Turkey’s industrial output rise in October beats expectations

Turkey’s industrial output rise in October beats expectations
By bne IntelliNews December 8, 2016

Turkey’s calendar-adjusted industrial production increased by 2% y/y in October, data from statistics office TUIK showed on December 8.

The reading, which sees growth resuming after a sharp 3.1% y/y contraction in September, raises hopes the industry that suffered a collapse in the wake of the failed July 15 coup attempt might be starting to show signs of recovery. Moreover the October rise was stronger than market expectations for a mild 0.8% rise in industrial output.

On a seasonally and calendar adjusted basis industrial production increased 3.7% m/m in October, but the unadjusted industrial production index rose only 0.2% y/y.

The October data is good news for investors as it suggests some recovery in economic activity. Investors are also keeping a close eye on a series of measures the government plans to unveil on December 8 and that are designed to improve the investment climate and to support employment. How market participants view these measures will set the course for the currency and stocks. GDP growth was weak in the third quarter of the year, but will pick up starting in Q4, according to the country’s central bank. TUIK will release the Q4 GDP data on December 12.

The industrial output growth in October was supported bya a 1.7% hike in the key manufacturing sector, which recovered from a 3.7% y/y contraction in September. The energy sector saw a 5.4% y/y increase in production versus 0.5% decline in the previous month. Intermediate goods production increased by a weak 0.2% y/y, and capital goods registered a 3.6% output increase. The durable goods sector that reported a 9.5% drop in production in September also saw another 9.5% y/y decline in output.

Calendar-adjusted Industrial Production Growth by main Industrial Groups (y/y, %)        
  Jul Aug Sep Oct
Total Industry -4.8 2.2 -3.1 2
Intermediate Goods -5.5 0.9 -1.6 0.2
Durable Consumer Goods -16.6 1 -9.5 -9.5
Non-durable Consumer Goods -4.8 5.8 -6.5 4.1
Energy 1.9 3.7 -0.5 5.4
Capital Goods -6.3 -1.4 -2.3 3.6
Source: TUIK