ICI Released April 2023 Türkiye Manufacturing PMI and Türkiye Sector PMI Report

• 02.05.2023
• News

The Istanbul Chamber of Industry (ICI) Türkiye Manufacturing PMI, which is the fastest and reliable reference accepted in manufacturing industry performance of the economic growth, rose to 51.5 in April, d above the 50.0 no-change mark for the fourth month running. Moreover, the rate of improvement in the health of the sector was the most pronounced since December 2021. Stronger demand was reported by a number of firms in April, leading to increases in new orders and output. Some respondents also indicated that workloads had risen due to an ongoing recovery from February's earthquake.

According to the Istanbul Chamber of Industry Türkiye Manufacturing PMI report, input costs continues to increase in all the monitored sectors in April, but the inflation decelerated in most of the sectors compared to March. Six sectors showed increase in production. Land and sea vehicles sector and the base metal sector achieved faster recovery and strong expansion in output. However, some other sectors, particularly the wood and paper products sector and the clothing and leather products sector, continued to struggle with harsh activity conditions. New orders increased in half of the sectors while employment increase in most of the sectors.

The April 2023 period of Istanbul Chamber of Industry (ISO) Türkiye Manufacturing PMI (Purchasing Managers’ Index) survey, which is the fastest and most reliable reference accepted in manufacturing industry performance of the economic growth, was announced. According to the results of the survey where any figure greater than 50.0 indicates overall improvement of the sector, the headline PMI posted 51.5 in April, up from 50.9 in March and above the 50.0 no-change mark for the fourth month running. Moreover, the rate of improvement in the health of the sector was the most pronounced since December 2021. Stronger demand was reported by a number of firms in April, leading to increases in new orders and output. Some respondents also indicated that workloads had risen due to an ongoing recovery from February's earthquake. 

Moreover, total new business, new export orders and output all increased at sharper rates than in March. The rise in production was the most pronounced in 20 months.

A combination of higher new orders and disruption from the earthquake meant that backlogs of work increased for the first time in 14 months. The main source of direct disruption from the earthquake in April was around supply chains, with firms reporting ongoing difficulties obtaining materials. Lead times lengthened for the fourth month running. Delivery delays prevented a rise in stocks of purchases despite a first expansion in purchasing activity in almost a year-and-a-half as manufacturers responded to higher workloads. Some firms increased their staffing levels at the start of the second quarter, but a number of retirements due to the introduction of the early retirement law meant that employment was broadly unchanged overall. Input prices continued to rise sharply in April amid higher raw material costs and currency weakness. That said, the rate of inflation eased to the slowest in the year-to-date. In some cases, firms mentioned lower energy prices. Similarly, output prices rose at the softest rate since August 2022. 

Commenting on the Istanbul Chamber of Industry Türkiye Manufacturing PMI survey data, Andrew Harker, Economics Director at S&P Global Market Intelligence, said: 

The recovery in the Turkish manufacturing sector gathered momentum in April, with gains in new orders and output solidifying and prompting a renewed increase in purchasing activity. Firms would also have liked to see employment rise, but a number of retirements made achieving this something of a challenge. "February's earthquake continued to impact the sector, most noticeably through the effect on supply chains and the ability of firms to secure the materials they needed. As such, backlogs of work started to build up following a sustained period of reduction.”

Inflation slowed down in most of the sectors in March

According to the Istanbul Chamber of Industry Türkiye Manufacturing PMI April report, some sectors showed signs of strong recovery from February's earthquake in April, while some continued to having difficulties in getting new orders and increasing output. In all the 10 monitored sectors, the input costs continued to increase, but the inflation rate decelerated in most of them compared to March. The number of sectors with increased output was six as was the case in March. However, the sectors demonstrated significantly different trends. Land and sea vehicles sector and the base metal sector achieved faster recovery and strong expansion in output. However, some other sectors, particularly the wood and paper products sector and the clothing and leather products sector continued to struggle with harsh activity conditions. Similar to the output, new orders increased in half of the sectors. The strongest increase in new orders was in base metals, while the sharpest deceleration was in the wood and paper products sector. 

Most of the sectors increased their staffing levels in April, but a number of retirements due to the introduction of the early retirement law meant that employment was broadly unchanged overall. The strongest growth in employment was recorded in chemical, plastic and rubber products sector which had the highest increase in the number of employees of the last 16 months. And in the sectors showing stable new orders, the employment showed a weaker outlook. In all the 10 sectors, the input prices continued to increase in April, but the inflation rate decelerated in most of these sectors. The most significant increase in input costs was in the clothing and leather products sector, while the most moderate increase was in the chemical, plastic, and rubber sector. The land and sea vehicles sector showed the fastest increase in sales prices, as the strong growth seen in both the domestic demand and new export orders supported the pricing strength. The only sector that saw drop in final products prices was the chemical, plastic and rubber products sector. The problems experienced in input purchasing caused by the February's earthquake lengthened the lead times in April as well. The most significant deterioration was in the land and sea vehicles where the input demand rose sharply due to the increase in workloads.

You can find attached the Istanbul Chamber of Industry Türkiye Manufacturing PMI and Sector PMI April 2023 reports.