- In December, Turkiye’s manufacturing sector experienced continued moderation, marked by a slight increase in the Istanbul Chamber of Industry Turkiye Manufacturing PMI to 47.4.
- Despite a minor uptick, the sector continues to face challenges such as reduced orders and production, alongside stabilising employment, and decelerating input cost inflation.
In December 2023, the Turkish manufacturing sector marked the end of the year with continued moderation, stretching into its sixth successive month. The Istanbul Chamber of Industry Turkiye Manufacturing PMI, a critical measure of manufacturing performance, showed a minor increase to 47.4 in December from 47.2 in November.
Despite this slight uptick, the PMI indicates an overall moderation in business conditions within the manufacturing sector, extending the period of softening operating conditions to half a year. This contrasts sharply with the improvement witnessed in the first half of the year.
Domestically and internationally challenging market conditions have led to a slowdown in new orders and a scaling back of production. However, there is a silver lining as employment levels have stabilised, providing a glimmer of hope amidst the downturn,S&P Global said in a news release.
On the price front, input cost inflation has decelerated to a seven-month low, providing some respite for manufacturers. Despite this, selling prices have slightly increased, hinting at ongoing adjustments within the sector.
Manufacturing production has mirrored previous survey periods, largely influenced by the challenging market conditions. A significant factor cited for the slowdown is the lack of demand, with noticeable declines in both total new orders and international business, allowing firms to work through backlogs.
Employment levels have shown resilience, stabilising in December, and ending a two-month sequence of decline. While some firms are keen to expand capacity, others are seeing staffing levels diminish due to fewer new orders and resignations.
Purchasing activities have been cut down significantly, leading to the most considerable reduction in four months, impacting the stocks of inputs. Nevertheless, this decrease in demand for inputs has enabled suppliers to quicken their deliveries, concluding an 11-month period of lengthening lead times.
The end of the year brought mixed signals for the Turkish manufacturing sector, with currency weakness, higher wages, and increased raw material prices contributing to a continued rise in input costs. However, the rate of inflation has eased, offering some relief. Meanwhile, output prices have risen at the fastest pace since August, reflecting the complex balancing act manufacturers are facing in Turkiye’s economic landscape.
Source: fibre2fashion