The Istanbul Chamber of Industry Turkey Manufacturing PMI, which is considered the fastest and most reliable reference in the manufacturing industry performance, which is the leading indicator of economic growth, decreased to 46,9 in July and remained below the threshold value of 50 for the fifth month in a row. The index pointed to the most significant slowdown in operating conditions since May 2020. The slowdown was due to a general lack of demand, while uncertain market conditions and continued price pressures exacerbated this problem.
Istanbul Chamber of Industry Turkey Sectoral PMI report also pointed to weakness in the overall manufacturing industry sector in July. For the first time in the last 15 months, production has slowed down in all 10 sectors. Similarly, new orders slowed down in nine out of 10 sectors, with the exception of the strong increase recorded in the land and sea vehicles sector. On the foreign demand side, a slightly more positive picture was observed and new export orders increased in three sectors.
The results of the Istanbul Chamber of Industry (ISO) Turkey Manufacturing PMI (Purchasing Managers Index) survey for the period of July 2022, which is considered the fastest and most reliable reference in the manufacturing industry performance, which is the leading indicator of economic growth, have been announced. According to the survey results, in which all figures measured above the threshold value of 50,0 indicate an improvement in the sector, the headline PMI, which was measured as 48,1 in June, declined to 46,9 in July, remaining below the threshold value for the fifth month in a row.
The index pointed to the most significant slowdown in operating conditions since May 2020. While the slowdown in July was due to a general lack of demand, uncertain market conditions and ongoing price pressures exacerbated this problem. The most significant loss of momentum since the first wave of the Covid-19 outbreak was observed in July in both production and new orders.
The relatively positive development on the demand side was the flat course in new export orders. Another positive indicator was the continued increase in employment due to the capacity expansion efforts of some companies. However, new hires remained very modest, the lowest increase in a 26-month recovery trend. Firms slowed down their purchasing activities in connection with the slowdown in new orders, while the first decline of the last three months was recorded in input stocks.
Signals of easing inflationary pressures in the sector drew attention. Although input costs continued to rise sharply due to the depreciation of the Turkish lira, this increase was the most moderate since February 2021. Thus, final product price inflation fell for the fourth month in a row and recorded the lowest increase in nearly a year and a half. Due to the difficulties experienced by suppliers in sourcing materials and global logistics problems, supplier delivery times continued to increase. Although disruptions in supply chains were the most pronounced in the last three months, they were much more moderate compared to the beginning of the year.
Commenting on the Istanbul Chamber of Industry Turkey Manufacturing PMI survey data, S&P Global Market Intelligence Economy Director Andrew Harker said: “With the start of the second half of the year, uncertainties in the markets, the slow course of demand and price pressures have led to difficult operating conditions for Turkish manufacturers. The latest PMI survey results presented a relatively positive outlook only on the new export orders and employment side. The data continued to signal that inflationary pressures were peaking. The increases in both input costs and final product prices were at the lowest rate in nearly a year and a half. The reduction in price pressures may provide some opportunities for companies to win back customers in the coming months.”
Production slowed down in the 10 sectors followed
Istanbul Chamber of Industry Turkey Sectoral PMI pointed to weakness across the manufacturing industry sector in July. For the first time in the last 15 months, production has slowed down in all 10 sectors. The two sectors where the most significant decreases were realized were non-metallic mineral products and textile products. Similarly, new orders slowed down in nine out of 10 sectors, with the exception of the strong increase recorded in the land and sea vehicles sector. The sharpest slowdown was in textiles, with new orders from this sector falling the fastest since the first wave of the Covid-19 outbreak. On the foreign demand side, a slightly more positive picture was observed, with new export orders increasing in three of the ten sectors.
Signs of weakness in demand, as well as the decline in production requirements, led to reduced employment in the majority of sectors. The upward trend in employment in food products, basic metal industry and clothing and leather products was interrupted.
A general slowdown in purchasing activities was also observed. The only sector that increased input purchases was land and sea vehicles. However, as in the others, companies in this sector also reduced their input stocks.
Although input costs inflation remained high, the rate of price increase in most sectors remained low compared to June. While the most significant increase in input prices was realized in the non-metallic mineral products sector, the slowest increase was recorded in the basic metal industry. While the most moderate increase in sales prices in July was again in the basic metal sector, wood and paper products were the only sector where inflation accelerated on a monthly basis. While the delivery times of suppliers were extended in all sectors, the sector where the most obvious deterioration in supplier performance was experienced was machinery and metal products. The most limited increase in delivery times was in the textile sector.
Istanbul Chamber of Industry Turkey Manufacturing PMI ve Sectoral PMI You can access all of the July 2022 reports in the attached files.
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