Turkish retail, service industries show June confidence fall, construction mood rises

Turkish retail, service industries show June confidence fall, construction mood rises
By bne IntelliNews June 23, 2017

The seasonally-adjusted business sentiment indices for Turkey's service and retail industries deteriorated on a monthly basis in June but the construction industry’s confidence improved in the month, statistics office TUIK said on June 23, releasing the results of its monthly confidence survey.

Turkey's confidence indicators are still under political pressure despite Turkish President Recep Tayyip Erdogan officially claiming a narrow victory in the April 16 referendum on shifting to an executive presidency. Domestic and regional tensions are still being generated by the Syria and domestic Kurdish conflicts, while the Qatar crisis is now an added anxiety. Main opposition CHP leader Kemal Kilicdaroglu’s “justice march” also poses risks in terms of raising social tensions on the way to the first anniversary of the July 15 failed military coup attempt of last year.

Ankara’s relations with the US are strained over Washington’s support for the Syrian Kurdish YPG militia and the arrest warrants lately issued for some of Erdogan’s security guards following the brawl that erupted outside the Turkish ambassador's residence last month during the Turkish president’s visit to Washington. Another difficulty for Ankara is that the Iraqi Kurds are preparing to hold a referendum on independence later this year, a move that could trigger tensions and hostilities across the region.

Investors are demanding that the new Erdogan-led government delivers long-delayed and much-needed economic reforms that will restore the kind of investor confidence key to putting the economy on a more sustainable growth path. However, expectations are still mainly focused on a possible snap general election poll.

The seasonally-adjusted confidence index for the construction sector rose by 0.4% m/m to stand at 86.7 in June, following a 0.8% rise in May, TUIK data also showed on June 23. Despite the slight recovery in the last two months, the index value for construction confidence is still well below the 100-mark which separates optimism from pessimism.

Home sales in Turkey grew 7% y/y to 440,226 units in January-April. Turkey's construction sector calendar-adjusted turnover index rose 5.3% y/y in Q1.

Retail confidence in June deteriorated on a monthly basis following a two-month long improvement path in the previous two months. The seasonally-adjusted retail confidence index declined 2.1% m/m to 100.7.

Turkish retailers have been recorded as optimistic in the last three months despite the deterioration in June.

The Turkish retail sales figures have delivered annual contractions for seven consecutive months from October to April despite the government introducing economic stimuli on the way to the April 16 referendum, according to the latest data from the TUIK.

The service industry’s seasonally-adjusted confidence index fell sharply by 3.1% m/m to 98.8 in June, pushing the service industry back to pessimism. The industry switched to optimism in May for the first time since July 2016. However, optimism in the service industry survived for only one month.

Data

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