Turkish manufacturing production returns to growth

ISTANBUL

Turkish manufacturing production returned to growth in February, rising at a solid pace amid signs of stabilization of customer demand, a survey by S&P Global has shown.

The headline manufacturing PMI moved back above the 50 no-change mark in February, posting 50.2 from 49.2 in January.

The reading, therefore, signaled the first improvement in business conditions for eight months, albeit one that was only fractional, S&P Global said in a statement, adding that central to the strengthening of overall operating conditions in February was a renewed expansion of manufacturing output.

Where production increased, panelists reported signs of customer demand improving.

Firms also increased their purchasing activity, but staff shortages and difficulties sourcing raw materials meant that employment and stocks of purchases were scaled back, it noted.

“On the price front, the rate of input cost inflation eased marginally, but output prices increased at the fastest pace since August last year.

New export orders slowed to a lesser extent over the month, while tentative signs of improvement in new orders and higher production requirements prompted firms to expand their purchasing activity for the first time in eight months," the statement read.

Stocks of inputs continued to moderate, however, in part due to delays receiving inputs from suppliers due to the challenges using the Suez Canal, it added.

While purchasing activity increased, firms signaled a moderation of employment amid voluntary resignations and difficulties sourcing new staff.

Still, manufacturers were able to continue working through backlogs of work.

Input costs rose sharply again, linked to higher raw material and transportation prices, currency weakness and the recent minimum wage increase, the survey noted, adding that the pace of inflation ticked lower.

"A renewed expansion in output provided a boost to the Turkish manufacturing sector in February and suggests that we should see some solid growth numbers come through in the official data in the months ahead,” commented Andrew Harker, economics director at S&P Global Market Intelligence. 

The Turkish economy grew by 4.5 percent last year after expanding 5.5 percent in 2022, the data from the Turkish Statistical Institute (TÜİK) showed on Feb. 29.

Industry expanded 0.8 percent in the whole of 2023, with the sector’s growth rate slowed from 5.5 percent in the third quarter to 1.9 percent in the October-December period.

The manufacturing sector recorded an annual growth of 1.6 percent in 2023.