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Manufacturing PMI in Turkey at a 2-year low

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Turkey’s Manufacturing Purchasing Managers (PMI) Index fell to its two-year low in June.

According to the June results of the Istanbul Turkey Chamber of Industry (ISO) Manufacturing PMI survey, the leading PMI, measured at 49.2 in May, fell to 48.1 in June, indicating a slowdown in performance. of the Turkish manufacturing sector.

The slowdown was the most significant since the first wave of Kovid-19 in early 2020.

Rising prices and difficult economic times were effective in weakening the demand environment at the end of the second quarter. The slowdowns in both production and new orders were more pronounced than in May. Employment continued to be one of the sectors where there were positive developments in the latest survey data and companies continued to increase their staff. However, the increase in employment was recorded at the second slowest pace of the upward trend of the past 25 months.

Commodities, energy and exchange rates were effective on input prices.

Firms continued to reduce their purchasing activities in parallel with the slowdown in purchases of new orders. Inflationary pressures remained strong in June. The rate of increase in both input costs and final product prices remained above serial averages. According to the survey respondents, the increase in input prices is due to rising costs of raw materials and energy, as well as the negative trend in exchange rates.

Therefore, companies have drastically increased their sales prices. On the other hand, this increase was the most moderate level since September last year.

The disruptions in supply chains continued

The shortage of raw materials played a role in the continuous lengthening of supplier delivery times. Although disruptions in supply chains have increased since May, they have been much milder than in previous periods of the worst delays.

Recently, Turkish producers have been faced with a difficult market environment. As a result of rising prices and weak demand, there is a slowdown in new orders and a drop in production. Although the increase in employment was once again the main positive development of the survey, this increase was at the most moderate levels of the last two years. Difficult conditions for companies are likely to persist in the coming months.

Andrew Harker, Director of Economics at S&P Global Market Intelligence

Production slowed in most of the 10 sectors followed

According to the June Sector PMI report from the Istanbul Chamber of Industry Turkey, survey data indicated that the signs of improvement seen in May eased in many sectors in June. New orders followed in nine of the 10 sectors, while production slowed in most sectors. Inflationary pressures, on the other hand, remained high.

Despite the many challenges faced by businesses, employment growth continued in most of the sectors followed. In June, only new orders for clothing and leather products remained in the growth zone, while orders in six sectors declined relative to growth. The most marked slowdowns were recorded in the sectors of non-metallic mineral products and the base metal industry, respectively.

Parallel to the trend in new orders, the most significant slowdown in production was in the non-metallic mineral products sector. Production in only three sectors increased, namely clothing and leather goods, land and sea vehicles, machinery and metal products. In May, there were seven sectors that increased production.

Inflation inflation signals acceleration

Despite indications that demand conditions are difficult, most sectors continued to expand their employment volumes in the middle of the year. The strongest increase in employment was observed in the land and sea vehicle sector, followed by machinery and metal products. Reflecting the trend in new orders and production, non-metallic mineral products were also the most cautious sector for new hires.

Unlike the picture of previous months, input cost inflation again showed signs of acceleration in June. While the largest rise in input prices was achieved in food, the most significant acceleration in inflation compared to May was seen in the textile sector.

Due to the fact that companies have mirrored the rising costs for their customers, the fastest rise in the prices of final products has been recorded in food products. The sector with the lowest increase in selling prices was the base metals industry. The signs of easing supply chain disruptions continued in many sectors.

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