Slowdown in Turkish manufacturing sector recovery

Output, new orders soften in December due to pandemic restrictions, yet firms continue to expand staffing levels

Slowdown in Turkish manufacturing sector recovery

Pace of recovery in Turkey's manufacturing activity was down in December, according to a closely watched business survey released on Monday. 

Turkey's Purchasing Managers' Index (PMI) for the manufacturing sector slipped to 50.8 last month, down from 51.4 in November, showed the London-based global data firm IHS Markit's monthly report, prepared in collaboration with the Istanbul Chamber of Industry. 

The latest reading indicates that the manufacturing sector's health has least improved in the last seven months despite the conditions of business have continued to show signs of improvement, it said. 

The survey indicated that the newly imposed pandemic restrictions caused to slowdowns in both output and new orders during December. 

"New export orders also eased amid a second wave of infections across a number of export markets," it noted. 

In spite of slowdowns in output and new orders, Turkish manufacturers expanded both their staffing levels and purchasing activity in order to support production, it added. 

"Employment rose for the seventh successive month, and at a solid pace that was unchanged from that seen in November," it stressed. 

Meanwhile, the growth of input buying followed moderation in the previous month. 

While purchasing activity rose, difficulties obtaining raw materials meant that stocks of purchases continued to fall. 

Pointing out the impact of rising inflation on both input and output costs, the data said supply shortages, combined with currency weakness, led to a sharp and accelerated increase in input costs. 

"Output prices also rose sharply, albeit at a slightly slower pace than in November," it noted. 

Commenting on data, Andrew Harker, the economics director at IHS Markit, said: "The Turkish manufacturing sector ended 2020 facing twin headwinds. First, the pandemic which has blighted so much of the year led output and new orders to soften. 

"Second, severe supply-chain disruption hampered the ability of firms to secure the materials they need and added to already sharply rising cost burdens." 

Despite these challenges, he underlined, firms were keen to expand capacity, take on extra staff and purchase more inputs, and marking manufacturers would be ready if and when the aforementioned constraints on operations ease.