ICI Turkish Manufacturing PMI October 2020 Report and Turkish Sectoral PMI Report Were Announced

• 02.11.2020
• News

Istanbul Chamber of Industry Türkiye Manufacturing PMI (Purchasing Managers Index), the fastest and most reliable reference for the manufacturing industry’s performance that is the leading indicator of economic growth increased to 53,9 in October and pointed out to a significant improvement in the performance of the sector. Following the sharp shrinkage resulted from the Covid-19 pandemic, the Turkish manufacturing sector demonstrated a growth for five months in a row. Production volumes increased and growth accelerated compared to September. Significant increase in the employment maintained its existence and the rate of employment creation reached the highest level since February 2018.

According to the Istanbul Chamber of Industry Turkish Sectoral PMI October Data, the strongest growth in the 10 sectors followed within the scope of survey was recorded in basic metal industry and chemical, plastic and rubber sectors. The highest increase in the production and employment realized in the basic metal industry and chemical, plastic and rubber industry while the leading sectors where the growth in new orders was experienced. Operating conditions in the food products and clothing and leather products sectors experienced weakness.

The October 2020 results of Istanbul Chamber of Industry Türkiye Manufacturing PMI survey (Purchasing Managers Index), the fastest and most reliable reference for the manufacturing industry’s performance that is the leading indicator of economic growth were announced. Based on the survey results where all figures measured over 50,0, the threshold value point out to sectoral improvement, PMI which was measured as 52,8 in September recessed to 53,9 in October and pointed out to a significant improvement in manufacturing industry. Following the shrinkage resulted from the Covid-19 pandemic, the Turkish manufacturing sector demonstrated a growth for five months in a row.

Upward trend maintained its existence for the fifth month in new orders in row and manufacturers stated that the customer demand continued to improve. New orders recorded increase as well. In this way Production volumes increased and growth accelerated compared to September. Depending on the increase in production and product deliveries to the customers, accumulated works decreased for the last three months.

The significant increase which continued in employment supported the expansion in production. It drew attention that the speed of employment creation reached the highest level since February 2018. Manufacturers increased their purchasing activities in October; however, input stocks decreased because of using the inputs in production processes and the difficulties experienced in material supply. Supply chain delays were experienced in a higher rate in the inputs imported. In general, the highest increase was recorded in the delivery durations since June. The weakness in the Turkish lira led to sharp increases in both input costs and final product prices in October. While the input costs indicated the most obvious increase of the last two years, the increase in the final product prices was realized in the strongest rate of last 25 months.

Andrew Harker, Economy Director of IHS Markit who evaluated the Istanbul Chamber of Industry Turkish Manufacturing PMI Data expressed that:

“The recovery in the Turkish manufacturing sector maintained its existence in October due to the ongoing strong increase in production. That firms continued to increase employment to support production pointed out the trust on the sustainability of the recovery. IHS Markit predicts that industrial production will decrease by only 0.8 percent in 2020, despite the Covid-19-resulted sharp decrease experienced at the beginning of the year. This positive overview is realizing despite of the increase in inflationary pressures caused by the ongoing weakness of the Turkish lira.

The number of sectors of which operation conditions improved has risen to eight

According to the Istanbul Chamber of Industry Turkish Sectoral PMI October Data, the trends observed in different sectors of the Turkish manufacturing industry recently maintained their existence mainly at the beginning of the fourth quarter of 2020. The number of sectors of which operation conditions improved was seven in September however, since the wood and paper products industry returned to the growth zone by which the number has risen to eight in October. The strongest growth in the 10 sectors followed within the scope of survey was recorded in basic metal industry and chemical, plastic and rubber sectors. The highest increase in the production and employment realized in the basic metal industry and chemical, plastic and rubber industry while the leading sectors where the growth in new orders was experienced. The two sectors of which operation conditions lost strenght in October were food products and clothing and leather products . The current shrinkage trend reached the second month in food products and the eighth month in the clothing and leather products sector. These two sectors became the areas where the production decreased as well.

On the other hand, the recovery period continued after the shrinkage caused by coronavirus and fife of 10 sectors realized a stronger production increase compared to September. As the reflection of the strong improvement in new orders from abroad, increases were experienced in total new orders generally. The number of sectors of which new export orders increased out of ten sectors followed was four in September but increased to eight in October. 

Positive developments were observed in labor force market in manufacturing industry. All sectors experienced employment increase since the end of 2017. The depreciation of the Turkish lira continued to put upward pressure on prices in October. A similar view was seen in the final product prices and inflation in eight sectors accelerated. Due to Covid-19 and material deficiencies, any recovery was not observed in the breakouts in supply chain.