According to the data announced by the Istanbul Chamber of Industry and IHS Markit; Manufacturing PMI increased from 52.8 to 53.9 in October. 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. In the period of economic normalization, manufacturing sector activity continues to recover. Following the strong recovery effect in 3Q20, sectoral confidence indices and leading indicators continue to increase in the 4Q20 period.
If we look at the details of the PMI data; production and new orders accelerated. The job creation rate was the highest in the last 32 months. It is seen that the increase in employment and the acceleration in new orders support the increase in firm activity and this has a positive effect on production. On the other hand, the tightening financial conditions at home, increasing Covid cases in Europe and new restrictions will cause the suppression of both domestic and foreign demand. Therefore, we expect a decreasing trend, especially in export orders. With the effects of the depreciation of TRY, input costs and product prices increased. As of October, we expect the increase in imported input costs to be felt more in final product prices and to add weight to the increase pressure in CPI.
While the data for October reveal that we are still in a strong growth zone, the demand pressure to be seen with the tightening of financial conditions inside and the slowing effect of new quarantine measures on the foreign economies may cause orders and production to decrease this accelerated trend in the following months. The epidemic conditions abroad have worsened compared to the previous month, and Europe's large economies have introduced new restrictions. We do not expect the depreciation of the TRY to create a full competitive advantage in export markets that will experience additional difficulties in terms of demand due to the increasing upward pressure on foreign currency-based input costs and Covid. We think that the cost pressures created by the deterioration of exchange rate stability will keep inflationary effects active.
Kaynak Tera Yatırım
Hibya Haber Ajansı