Turkish manufacturing returns to growth for first time in eight months, February PMI shows

Turkish manufacturing returns to growth for first time in eight months, February PMI shows
/ S&P Global / Istanbul Chamber of Industry
By bne IntelliNews March 3, 2024

Turkish manufacturing production for the first time in eight months returned to growth in February, according purchasing managers’ index (PMI) data released on February 1.

The reading on the Istanbul Chamber of Industry PMI for Turkish manufacturing moved back above the 50.0 no-change mark to 50.2 from 49.2 in January.

As part of the fractional improvement in business conditions, firms increased their purchasing activity, but shortages of staff and difficulties sourcing raw materials, partly due to Houthi attacks on shipping in the Red Sea, meant employment and stocks of purchases were scaled back.

Andrew Harker, economics director at S&P Global Market Intelligence, said: "A renewed expansion in output provided a boost to the Turkish manufacturing sector in February and suggests that we should see some solid growth numbers come through in the official data in the months ahead.

"Although new orders continued to moderate, the news here was also promising as demand neared stabilisation. Firms will be hoping that new order trends can join those for output in growth mode in the near future."

In a note to investors on the PMI data, Nicholas Farr at Capital Economics said the 50.2 reading was “driven by an improvement in the output and new orders indices” and that “on past form, that leaves the PMI consistent with a strengthening in industrial production growth to around 5% y/y last month.

“This provides further evidence – after stronger-than-expected Q4 GDP data released this week – that the economy is holding up better than we had expected. The input and output price components remained elevated too, suggesting price pressures remain strong.”

PMI survey compiler S&P Global said that though the rate of input cost inflation eased marginally, output prices increased at the fastest pace since August.

Although new orders continued to moderate, it added, “the latest slowdown was only marginal and the least marked in the current eight-month sequence of easing new work”.