The manufacturing industry purchasing managers index (PMI) rose to 47.8 in August, indicating that the contraction in the manufacturing sector continued, albeit at a limited pace.
Halfway through the third quarter, demand continued to be weak. New orders improved somewhat compared to July but still continued to decline at a rapid pace. Production, employment and purchasing activity also declined in parallel with demand.
While input stocks saw their biggest drop in a year, input costs continued to rise sharply and manufacturers increased final product prices faster than in the previous month.
The manufacturing PMI compiled by S&P Global for the Istanbul Chamber of Industry (ISO) rose to 47.9 from 47.2 in July, but remained below the 50-mark that separates growth from contraction for the fourth month in a row. Conditions for the sector have been weakening since April.
The decline in new orders continued in August due to difficult market conditions. The new orders sub-index rose from 44.3 to 46.7 in August, but the contraction entered its fourteenth month. The new export orders sub-index rose from 47.5 to 50.5, marking the first growth since June 2023.
Manufacturers have reduced production, employment and purchases in line with the ongoing weak demand conditions. The production sub-index fell to 46.2 from 46.5 in August. Price pressures also contributed to the slowdown in production, the most significant slowdown since November 2022.
The employment sub-index increased from 48.2 in August to 48.6, but showed that employment continued to decline.
Input costs continued to increase at a significant pace, albeit at a lower rate than in July. While the weakness in the Turkish Lira was the main factor causing input prices to increase, it was stated that raw material and logistics costs also increased.
S&P Global Economics Director Andrew Harker, who evaluated the PMI data, said, “Turkish manufacturers had difficulty increasing new orders in August, despite some encouraging data regarding exports. While the general demand slowdown led to further reductions in production, employment and purchasing activities, companies also showed reluctance to hold stocks.”
“We expect the recent recovery in exports seen in August to strengthen in the coming months and become more widespread to help the sector transition into recovery,” Harker said.
