June PMI shows Turkish manufacturing sinking further into contraction territory

June PMI shows Turkish manufacturing sinking further into contraction territory
/ S&P Global Market Intelligence
By bne IntelIiNews July 1, 2022

The Turkish manufacturing sector has sunk into a “challenging demand environment”, according to the Istanbul Chamber of Industry Türkiye Manufacturing Purchasing Managers’ Index (PMI) for June.

The headline PMI fell further into contraction territory, registering 48.1 compared to 49.2 in May (anything below 50.0 indicates a contraction).  

New orders, output and purchasing activity all softened.

The PMI reading signalled a moderation in the health of Turkish manufacturing that was the most marked since the initial wave of the COVID-19 pandemic in early 2020.

Andrew Harker, economics director at PMI compiler S&P Global Market Intelligence, said: “Turkish manufacturers are facing a challenging market environment at present, with price rises and demand weakness combining to lead to softer new orders and a scaling back of production.

“Increases in employment were again the main positive, although even here the rate of job creation was among the softest in the past two years. The months ahead seem likely to continue to prove challenging for firms.”

The June PMI data showed that for Turkish manufacturers rates of input cost and output price inflation remained sharp.

S&P Global said: “Business conditions have now softened in four successive months. Price rises and challenging economic conditions contributed to a weaker demand environment at the end of the second quarter, with both output and new orders moderating as a result.

“In both cases, the slowdowns were more pronounced than seen in May.”

Firms, said S&P, scaled back their purchasing activity again in line with softer new order inflows.

Steep inflationary pressures were recorded in June, with both input costs and output prices rising more quickly than the respective series averages.

S&P also noted: “According to respondents, higher input prices reflected rising raw material costs, increased energy charges and unfavourable exchange rates. In turn, firms raised their own selling prices sharply, albeit at the softest pace since September last year.

“Raw material shortages contributed to a further lengthening of suppliers' delivery times. Although more pronounced than seen in May, the extent of supply-chain disruption was again much weaker than during the worst of the recent delays.”