Muted demand and market uncertainty caused by the war in the Middle East continued to undermine Turkish manufacturers in August, though the Istanbul Chamber of Industry Turkiye Manufacturing Purchasing Managers’ Index (PMI), released on September 1, rose to its highest level in three months.

The headline PMI reading showed more contraction, coming in at 48.1 for August (only readings above 50.0 show growth), but it registered a slight improvement compared to July's 47.7.

Andrew Harker, economics director at S&P Global Market Intelligence, said: "The war in the Middle East continues to cast a shadow over the Turkish manufacturing sector, limiting demand and adding a layer of uncertainty to business decisions.

“Despite this, firms have been able to limit the impact, with new orders easing to the smallest degree in three months during August. This provides some hope that the sector can move up a gear in the months ahead, but much still depends on events in the Middle East and how they play out."

Businesses surveyed for PMI data again reported higher fuel and oil costs, which feed through into firms' selling prices.

While both total new orders and new export business eased, in both cases it was to a smaller degree than in July.

Manufacturers scaled back production for the third consecutive month.

“Firms expressed a preference to use existing inventories to help meet order requirements where possible, resulting in further reductions in stocks of both purchases and finished goods,” S&P said.

The rate of input cost inflation for Turkish manufacturers quickened to a three-month high amid the reports of higher costs for fuel and oil, plus rising raw material prices, it added.

Suppliers' delivery times lengthened amid disruption caused by the Middle East conflict, the PMI report also observed.