On a calendar adjusted basis Turkey’s industrial production rose by 5.5% y/y in June, higher than the market consensus forecast of 3% and much better than the 2.4% y/y rise recorded in June, data of the statistics office showed on August 7, raising hopes of recovery in economic activity in the coming months.

Intermediate goods output increased by 3.4% y/y after contracting in the previous five months, while durable consumer goods industry saw a robust 15% y/y increase in output. Capital goods sector’s production increased 9.9% y/y in the month, but the output increase in energy sector slowed to 1.8% y/y from 5.4% y/y in May. TUIK also reported that manufacturing production increased by a strong 6.9% y/y after a 3% y/y rise in output in the previous month.

On an unadjusted basis industrial production rose by 7.4% y/y, beating the market consensus forecast of a 4.5% y/y increase. In May, the unadjusted industrial production index increased only 0.5% y/y.

Data from the statistics office showed that on a seasonally and calendar adjusted basis industrial production rose 2.4% m/m (market consensus: 1.2% m/m) vs 1.9% m/m contraction in May.

The latest PMI survey suggested that manufacturing activity could have gained further momentum in July. The PMI increased to 50.1 in July, from 49.0 in June. But there are downside risks to the growth outlook, including uncertainties in domestic politics and the renewed clashes with the PKK.