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Turkey: August manufacturing PMI 47.4

According to the data announced by the Istanbul Chamber of Industry (ISO) and S&P Global; Manufacturing PMI rose from 46.9 to 47.4 in August.

EKONOMİ
Giriş Tarihi : 01-09-2022 14:20
Turkey: August manufacturing PMI 47.4

According to the data announced by the Istanbul Chamber of Industry (ISO) and S&P Global; Manufacturing PMI rose from 46.9 to 47.4 in August. The latest data, remaining below the threshold for the sixth month in a row, showed that although there was an improvement in August, the loss of momentum in the sector continued.

If we look at the details of the PMI data; The slowdown in production eased, but new orders lost momentum significantly. The downward trend in production seems to continue due to challenging market conditions and high prices. Insufficient demand and rising prices and weakness in the global economy were the main reasons for the decline in orders. In parallel, new export orders are weakening due to the decline in European demand. While inflationary pressures are weakening, factors such as the high cost of raw materials, transportation and energy, the increase in the minimum wage and the depreciation of the Turkish lira still exert upward pressure on input costs and sales prices. However, inflation rates declined to the most moderate levels of the last 31 months in input prices and in the last 18 months in finished product prices. Employment continued to increase. The fact that employment continued to increase and the rate of increase reached the highest level of the last three months was the relatively positive development of the survey.

Producers reported that they reduced their input purchases in August as their current input stocks are largely sufficient to meet their production requirements. Purchasing companies, on the other hand, continued to face longer delivery times due to the difficulties experienced by suppliers in supplying materials. The slowdown in sales enabled the upward trend in finished product stocks to reach four months. The increase in inventories was at the fastest pace since September 2015.

The incoming data point to a very clear slowdown trend, as similarly revealed by the economic orientation surveys. Even though the stress on input costs seems to have eased a little, the newly announced electricity and natural gas price hikes will again put upward pressure on them. There is a risk that upward price pressures will increase again in raw material items, especially in energy. On the other hand, we see that the conditions that will force Turkish producers and exporters in general are formed in two main axes. The first of these is the slowdown in European and world markets. The second is the effect of wages, electricity, natural gas and other costs. These factors negatively affect both potential and price competition. Even when oil prices are falling in the world, the increase in input costs prevents us from lowering prices in global markets, so we consider the balances that have arisen as negative in terms of our exports.

While the deceleration in general demand conditions explains the current situation, it also indicates that a slowdown may come from this channel in the future. It is seen that the industry has some problems recently in terms of both costs and difficulties in accessing finance. While the latest macro-prudential measures aim to ensure that loans are formed on the investment axis, thus weighting the commercial side, we have to monitor the possible positive effects of the sector in terms of access to finance. As for the industrialist's costs, the latest energy hikes indicate that the threshold to use subsidies is low and that higher cost and price effects would have arisen if there were no existing subsidies. In the second half, if the industrial investment does not make a perspective change that will change the view on the axis of production and consumption, the slowdown effect on the economy will outweigh.

Kaynak: Tera Yatırım- Enver Erkan
Hibya Haber Ajansı

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