Turkey PMI: Recovery in manufacturing slows down

According to the data announced by the Istanbul Chamber of Industry (ISO) and IHS Markit; Manufacturing PMI declined from 54.3 to 52.8 in September. (Tera Yatırım)

The manufacturing PMI index, which was 33.4 in April due to the economic recession caused by Covid-19, recovered in the following months and had a growth position as of June. The index, which increased with controlled openings and increased activity within the economic normalization period, points out that the recovery lost momentum, although it remained in an growth position in September after August.


After the worst of Covid-19 impacts, the 3Q20 period marked a strong recovery. As a reflection of the increasing economic activity during the normalization process that started in June, it was observed that the index passed into an growth zone above 50 threshold. Although it remained in the growth zone after August, the pace of recovery seems to have slowed down a bit. As a reflection of the growth in new orders, there is an acceleration in this area as the companies give more weight to employment-increasing investments. In contrast, production grew at a slower pace. While the depreciation of TRY increases inflationary pressures in terms of both product costs and final prices, it is stated that its reflection on export competition is positive.


While the data for September reveal that we are still in a strong growth zone, they justify our expectation of a slowdown due to the damping demand towards the end of the quarter. In the last quarter, the ongoing epidemic threat may increase the damping effect on the demand side in addition to tightening financial conditions. The recovery momentum of foreign markets will also be critical in terms of production and new order trends, and there may be a possible slowdown effect of the epidemic threat for these markets. Company feedback is that the depreciation of TRY has created better competition conditions for international markets. However, the said TRY depreciation increases production costs by causing an increase in input prices. This effect will be felt more in the process of decreasing stocks and procurement of raw materials. The effect of the course of the epidemic and the stability in exchange rates will be important in the last quarter.


Kaynak Tera Yatırım
Hibya Haber Ajansı