Turkish industrial production contracts sharply in July

By bne IntelliNews September 8, 2016

Turkey’s calendar adjusted industrial production fell by 4.9% y/y in July, data from statistics office TUIK showed on September 8.

The fall, coming after a 1.2% y/y increase in June and defying market expectations for a 1.3% hike, provides a clear sign that July’s coup attempt caused severe disruptions to the economy, analysts at Capital Economics write in a note. Moreover, forward looking data on the country’s vital manufacturing sector, suggests activity weakened further in August.

“With August’s manufacturing PMI falling back further, the slump in industry appears to have continued. This reinforces our view that growth over the second half of the year will be much weaker than in the first half,” the analysts suggest.

The seasonally and calendar output index declined 7% m/m in July, deepening from a 1.3% m/m slump in June. 

On a calendar adjusts basis, manufacturing output shrank 6.5% y/y in July, to follow a 0.4% decline in June, while output in the durable consumer goods industry plunged 16.6% y/y. Output growth in the energy sector eased sharply to 1.8% from June’s 10%. The capital goods industry’s production fell by 6.5% y/y, after registering a 1.1% y/y increase.

The unadjusted industrial production index fell as much as 8.4% y/y, following a weak 1.1% y/y increase in June, according to bne IntelliNews calculations. Analysts were looking for a 1.7% y/y decline in the unadjusted index.

Turkey's GDP growth probably moderated in the second quarter from the first three months of the year, Finance Minister Naci Agbal said earlier this week, suggesting growth this year might come in weaker than the government's target of 4.5%.

Industrial Production by main Industrial Groups (July)    
(%) Calendar Adjusted Seasonally & Calendar Adjusted
  (y/y) (m/m)
Total Industry -4.9 -7.0
Intermediate Goods -5.5 -2.7
Durable Consumer Goods -16.6 -21.1
Non-durable Consumer Goods -5.2 -7.9
Energy 1.8 -4.5
Capital Goods -6.5 -12.5
Source: tuik

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