Turkey’s calendar-adjusted industrial production index moved up by 3.5% y/y in May, pointing to a slowdown from the peak point of 6.7% y/y in April, the best growth in output recorded since August 2015, data from the national statistics office TUIK showed on July 10.

The country's industrial output growth entered its latest period of acceleration in March. Rising export demand in parallel with the depreciation in the Turkish lira, as well as government stimulation measures put in place before the April 16 referendum on bringing in an executive presidency, were the main drivers behind the improved industrial production performance.

The seasonally-adjusted industrial production index has posted annual growth for eight consecutive months since October. Despite the relatively limited slowdown, Turkey’s industrial production growth performance kept robust in May in parallel with expectations.

On a calendar and seasonally-adjusted basis, Turkey’s industrial production contracted 1.5% m/m after expanding 2.2% m/m in April.

Manufacturing output increased by 3.1% y/y in May after registering a 7.3% y/y rise in April, the highest annual growth registered since August 2015. Durable consumer goods production advanced 7.6% y/y in May, decelerating from as high as 16.2% y/y in April, thanks to VAT cuts for the sector. Output in the non-durable consumer goods sector contracted for the fourth consecutive month on an annual basis by 0.7% in May versus the 2.6% y/y decline registered in April.

Energy output was up 5.9% y/y in May versus 7.5% y/y in April.

Output in the capital goods manufacturing industry rose by 2.5% y/y in May, slowing from as high as 24.6% y/y in April while annual growth in intermediate goods production reached 5.2% y/y in May, the highest annual growth recorded since February 2016.

Turkey’s seasonally-adjusted industrial turnover index rose by 29.5% y/y in April after growing 26.3% y/y in March. The index last went through an annual contraction in September last year - declining 1.2% - when the industrial production index also posted its last annual decline - measuring 2.9%. Both indices have been on an upward path since that month, despite a temporary reverse in February.

Turkey's Manufacturing Purchasing Managers' Index (PMI) advanced further from 53.5 in May to 54.7 in June, reaching the highest level recorded since November 2013.

Turkey’s business confidence index rose 3% m/m to 112.4 in June, the highest level recorded since May 2014’s 113.5. The capacity utilisation rate (CUR) of Turkish manufacturing rose further to 79% in June, the highest figure recorded since August 2008’s 81.9%.

The capacity utilisation rate (CUR) of the Turkish manufacturing sector rose to 78.8% in May, the highest figure recorded since August 2013.

Leading indicators hint at a strengthening economic recovery in the second quarter, the central bank said on June 22 in the minutes of its latest Monetary Policy Committee (MPC) meeting. 

GDP growth accelerated to 5% y/y in the first quarter of this year from the 3.5% y/y expansion recorded in the previous quarter and the 1.3% y/y contraction posted for the quarter before that. The indicators suggest that Turkey’s economic growth will be stronger in the second quarter than it was in the first, Deputy PM Mehmet Simsek noted on June 12, commenting on the latest GDP data. 

Production of the industrial sector, which rose 5% y/y in Q4, was up 5.3% y/y in Q1 while manufacturing output rose by 5.1% y/y after growing 4.4% y/y in Q4, according to the latest GDP data.