Turkish manufacturing records lowest headline PMI for eight months

Turkish manufacturing records lowest headline PMI for eight months
By bne IntelIiNews February 1, 2022

Turkish manufacturing has recorded its lowest purchasing managers’ index (PMI) reading for eight months, with the January survey data from Istanbul Chamber of Industry and IHS Markit showing the price pressures companies are facing in a high-inflation environment.

It was a “challenging start to the year” for manufacturers in Turkey, said IHS Markit, announcing a January PMI of 50.5 compared to December’s 52.1. Any figure greater than 50.0 indicates overall improvement of the sector.  

The survey showed that input costs and output prices continued to rise sharply, albeit at softer rates than the records seen at the end of last year. This led to challenges for firms in securing new work, contributing to moderations in new orders and production.

The headline PMI posted above the 50.0 no-change mark in January thanks to contributions from the employment and suppliers’ delivery times indices, IHS Markit said.

Input costs

In a commentary on the PMI reading, it added: “As has been the case in recent months, Turkish manufacturers highlighted strong inflationary pressures, often due to weakness of the Turkish lira. Input costs continued to rise at a steep pace at the start of the year, although the rate of inflation slowed from the survey record posted in December. This was also the case with regards to selling prices, which increased at a much softer pace but one that was still well above the series average.

“Ongoing price pressures meant that firms continued to face challenges securing new orders, leading total new business to moderate for the fourth successive month. New export orders also slowed in January, ending a seven-month sequence of growth. With new orders easing, firms scaled back their production and purchasing activity, in both cases for the second month running.

“There was also a lack of pressure on capacity, and backlogs of work were reduced further. Although workloads eased, manufacturers continued to increase their staffing levels amid some reports that new workers had been hired as part of investment plans. Employment has now risen in each of the past 20 months, although the rate of job creation was the softest in this sequence.”

Difficulties around the sourcing of raw materials, logistics and price rises all contributed to a further lengthening of suppliers’ delivery times, although data suggested that disruption was much less pronounced than in December, IHS Market also said.

Andrew Harker, economics director at IHS Markit, commented: “The new year began very much as the old one ended, with Turkish manufacturers continuing to face the challenges of operating in an inflationary environment. There were, however, some signs of pressures beginning to ease, something which firms will hope continues over the rest of the first quarter to help them in the hunt for new business.”