Turkey's manufacturing index signals 'broad stabilization'

A key manufacturing index has pointed to a broad stabilization in Turkey's manufacturing sector, as manufacturing output increased since previous months and output index rose to the highest level since January 2016. 

The latest PMI index from the Istanbul Chamber of Industry (İSO) and IHS Markit was registered at 49.7 in February, up from 48.7 in January. The latest figure was above the 2016 average of 48.8. Any figure greater than 50 indicates overall improvement in the sector.

"The Turkish PMI rose to 49.7 in February, signaling a near-stabilization of the Turkish manufacturing sector. Encouragingly, output rose during the month and job creation resumed. The latest survey results also signaled weaker inflation than in recent months, although price pressures remained strong overall," said Trevor Balchin, senior economist at IHS Markit. 

The rise in the headline PMI in February was primarily influenced by the seasonally adjusted output and employment indices both registering above 50, and also an uptick in the new orders index (though it remained below 50). There was also a mildly positive contribution from the suppliers' delivery times index. The volume of new export business rose for the fifth time in seven months in February. Employment in the goods-producing sector also increased. This was the sixth time in seven months that the manufacturing workforce has expanded.

The recent depreciation in the Turkish Lira, however, continued to exert upward pressure on manufacturing input prices in February. The rate of input price inflation remained sharp, but eased for the second month running to a four-month low. Meanwhile, output prices charged by manufacturers continued to rise, but at a weaker rate than in December and January.