Turkey Manufacturing PMI recorded at 47.2 in November

The results of the Istanbul Chamber of Industry (ISO) Turkey Manufacturing PMI (Purchasing Managers' Index) survey for the November 2023 period have been announced. According to the survey results, where all figures measured above the 50 threshold indicate improvement in the sector, the headline PMI, which was 48.4 in October, fell to 47.2 in November 2023, remaining below the 50 threshold for the fifth consecutive month. This slowdown occurred at the most significant level of the last year.

Stagnant market conditions both domestically and internationally led to a continued loss of momentum in new orders in the middle of the final quarter, resulting in the sharpest slowdown recorded since November 2022. Due to the weakness in demand, manufacturers reduced production at the highest rate in the last year. According to survey participants, geopolitical tensions and difficulties in raw material procurement were also effective in the decline in production. The decline in production led manufacturers to reduce their employment volume for the second consecutive month, while resignations and retirements also contributed to the decrease. Although the decline in employment was moderate, it occurred at the highest rate since October 2022. November data indicated that employment in the Turkish manufacturing sector contracted on a monthly basis for the second time in a row. Although the decline was slight, it was recorded at the highest level in over a year. Survey participants stated that the decline in employment was due to insufficient workload, resignations, and retirements.

"THE BECOMING EVIDENT OF THE SLOWDOWN IS CONCERNING"

In November, a decrease was observed in firms' input and finished goods stocks, as well as in purchasing activities. Although input cost inflation fell to its lowest level in the last six months in November, it continued to remain at high levels. Feedback received from firms showed that the increase in raw material prices due to the depreciation of the Turkish Lira was effective in this development. As a result, manufacturers also increased their finished product prices, but this increase did not change in terms of rate compared to the previous survey period.

Evaluating the Istanbul Chamber of Industry Turkey Manufacturing PMI survey data, S&P Global Market Intelligence Economics Director Andrew Harker said:

“The Turkey Manufacturing PMI data is concerning as it shows that the slowdown in the sector is becoming more evident as we approach the end of the year. The widespread weakness in demand, both domestically and abroad, makes it increasingly difficult for firms to receive new orders, and this situation leads to a reduction in production, employment, and purchasing activities.”

GROWTH LIMITED TO THREE SECTORS

The report indicated that the weakness in the operating conditions of the manufacturing industry was widespread in November as well. While a limited number of sectors showed signs of improvement during the month, a significant slowdown was recorded, especially in clothing and leather products. In November, the clothing and leather products sector experienced the highest rate of decline in production volume since the first wave of the COVID-19 pandemic, while six other sectors also experienced a slowdown, thus limiting growth to only three sectors. Land and sea vehicle production improved for the first time in the last three months and recorded a strong increase. Moderate increases were seen in food products and non-metallic mineral products.

While three sectors, led by food products, increased their new order volume, orders in electrical and electronic products remained flat following the decline experienced in the previous month. New orders decreased in the majority of sectors, but considering that the decline was spread across all sectors in October, this represented a relative improvement on a monthly basis. Growth in new export orders was observed only in the food products and machinery and metal products sectors.

LOSS OF MOMENTUM IN PURCHASING

Although some sectors went for employment increases, the sectors experiencing a decline remained in the majority by a small margin. The sharpest loss in employment occurred in clothing and leather products, and this decline was recorded at the fastest pace in over three and a half years. Similar to employment, purchasing activities in November showed a loss of momentum in six out of ten sectors. Input cost inflation remained generally high as the rise in exchange rates pushed raw material prices up. While the fastest rise was seen in food products, the most moderate increase occurred in basic metals. Basic metals were also the sector where finished product prices increased at the lowest rate. This increase followed the decline experienced in the previous survey period. The sharpest rise in sales price inflation was recorded in machinery and metal products.

News Source: 12punto