Turkey: December manufacturing PMI 48.1

According to the data announced by the Istanbul Chamber of Industry (ISO) and S&P Global; Manufacturing PMI rose from 45.7 to 48.1 in December. The headline PMI fell below the 50 threshold for the tenth month in a row. In December of last year, PMI was realized as 52.1.

If we look at the details of the PMI data; new orders rose to 46.8 from 42.7 in November, marking the 15th consecutive monthly contraction. Here, although the more positive outlook in domestic demand seems to have pulled the index up, the weak outlook in foreign demand still causes the loss of momentum in export orders to be sharper. On the other hand, some survey participants reported that inflationary pressures continued to affect demand negatively.

Input costs inflation, which fell to the lowest level of the last three years in November, maintained its relatively moderate course in December as well. Accordingly, the increase in final product prices was at the same pace as in the previous survey period, and inflation was recorded at a much lower rate compared to the first periods of the year. Relative signs of improvement in production and orders also played a role in the increase in employment for the second month in a row. In the last month of the year, as in November, the delivery times of suppliers showed an improvement close to the records of the survey history. According to survey respondents, this was due to weak input demand and reduced interruptions at ports.

Turkey PMI Index… Source: Istanbul Chamber of Industry, S&P Global, Tera Investment

Expectations regarding future orders have an important place in the PMI, as in the Central Bank Business Tendency Survey announced last week. Although a decrease is expected in export orders in the upcoming period, the expectation of domestic demand-weighted order increase seems to have moved the index upwards. It is possible to attribute the increase in consumer confidence to this expenditure expectation. With the expectation of a recovery in domestic demand as of January, the real sector tends to increase its input purchases to meet this demand. As a result, although the loss of momentum and cost pressure in the manufacturing sector has eased, the sector still remains in the contraction zone. In the coming months, we think that the contribution of external demand will be negative, while the contribution of domestic demand will be positive.

Kaynak: Tera Yatırım-Enver Erkan
Hibya Haber Ajansı