Turkish PMI rises to eight-month high in October but still below growth levels

By bne IntelliNews November 1, 2016

Turkish PMI rose to 49.8 points in October from 48.3 a month earlier, signalling a near-stabilisation of business conditions in the key manufacturing sector, a survey compiled by Markit and the Istanbul Chamber of Industry showed on November 1.

Though at an eight-month high, the October reading keeps the figure below the 50-point threshold marking expansion. The improvement offers hope Turkey's industrial production will continue growth in the months to come. Turkey’s calendar adjusted industrial output increased by 2.2% y/y in August, rebounding from July's slump of 4.9% y/y.

“The survey also provided early signs that the Turkish economy is coming out of the slump triggered by July’s military coup attempt,” analysts at Capital Economics suggest in a note. The increase in the PMI index is consistent with industrial production growth of around 3%-4% y/y in the months ahead, up from around zero in Q3, the analysts add.

The increase in October came as new export orders rose for the second time in three months and purchasing activity was strongest in nearly two years. Having improved in August and September, manufacturing employment continued to increase in October, Markit noted. According to the latest official data, Turkey’s unemployment rate hit a five-month high in July, reflecting the effects of a slowing economy and troubles in the tourism industry. The number of employed in the industry sector fell by 76,000 from June.

“The weak lira exerted upward pressure on manufacturing input prices in October, with the rate of inflation reaching a 12-month high. Output prices rose at the fastest rate in five months as a result,” Markit said.

Renewed talks of holding a referendum to give the president more powers, an expected rate hike by the US Fed by the end of the year, and the conflicts in Iraq and Syria are keeping the Turkish lira under pressure. TUIK will release inflation figure for October on November 3. Consumer prices likely increased by 1.32% m/m in October, a recent survey by the central bank showed. Last week, the central bank kept this year's inflation outlook unchanged at 7.5%, but raised its forecast for 2017 to 6.5% from a previous 6%, citing rising import prices.

Calendar-adjusted Industrial Production Growth by main Industrial Groups (y/y, %)    
  July August
Total Industry -4.9 2.2
Intermediate Goods -5.5 0.9
Durable Consumer Goods -16.6 1.0
Non-durable Consumer Goods -5.2 5.8
Energy 1.8 3.7
Capital Goods -6.5 -1.3
Source: TUIK

Related Articles

Stage set for referendum battle on Turkish presidential rule as Erdogan backs reform bill

Turkish President Recep Tayyip Erdogan has approved a constitutional reform bill, paving the way for a referendum on switching to an executive presidential system with sweeping powers. PM Binali ... more

S&P warns Turkish banks face weak operating conditions this year

The areas of funding and asset quality will generate the main risks for Turkish banks during this year, Standard & Poor’s said in a report published on February 9. The rating agency expects ... more

Erdogan hits out at "exploitative" Turkish interest rate policy

Turkish President Recep Tayyip Erdogan on February 7 described interest rate policy in Turkey as "an instrument of exploitation" as he renewed calls for lenders to provide cheaper loans to boost ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss