Business conditions were broadly stable in the Turkish manufacturing sector during July as recent phases of expansion in output and new orders faded out amid strengthening inflationary pressures, S&P Global said on August 1, releasing the Istanbul Chamber of Industry Türkiye Manufacturing Purchasing Managers’ Index (PMI) for July.

The headline PMI dipped fractionally below the 50.0 no-change mark in July to 49.9, down from 51.5 in June. That, said S&P, signalled broadly stable business conditions and ended a six-month sequence of expansion.

Commenting on the PMI survey data, Andrew Harker, economics director at S&P Global Market Intelligence, said: "Resurgent price pressures dampened demand for Turkish manufactured goods in July. Both input costs and selling prices rose at much stronger rates at the start of the third quarter, making it harder for firms to secure new business. As a result, a four-month sequence of production growth came to an end. Manufacturers will be hoping that inflation starts to level off again to aid in the pursuit of new business."

As things stand, however, the indications are that inflation in Turkey is again on the rise.

S&P noted that in July the pace of input cost inflation accelerated sharply for the second month running in July and was the fastest since March 2022. More than half of all survey respondents (52%) indicated that their input prices had risen over the month, which they often linked to currency weakness. There were also some reports that higher wages had added to overall input costs.

Stronger price pressures also weighed on customer demand in July, leading to a first slowdown in new orders in five months, S&P added.