September 2021 Report of ICI Türkiye Manufacturing PMI and Türkiye Sector PMI Released

• 01.10.2021
• News

Istanbul Chamber of Industry Türkiye Manufacturing PMI (Purchasing Managers’ Index), which is recognized as the fastest and reliable reference in manufacturing industry performance, the leading indicator of economic growth, dropped to 52.5 in September, signalling a solid monthly improvement in operating conditions in the sector. Business conditions have now strengthened in four consecutive months, in line with sustained growth of output and new orders during this period. Growth of new orders and efforts to expand capacity led firms to increase their staffing levels at a solid pace.

According to the PMI® survey data of September from Istanbul Chamber of Industry, there were signs of improvement in demand conditions in especially export markets and most of the monitored sectors posted growth of output. Input costs increased at a broadly similar pace to that seen in general. The fastest increase in output was seen in clothing and leather products sector. New orders increased in most of the sectors, while new export orders increased in nine sectors, with the exception of land and sea vehicles sector. 

The September 2021 period of Istanbul Chamber of Industry (ISO) Türkiye Manufacturing PMI (Purchasing Managers’ Index) survey, which is the fastest and reliable reference accepted in manufacturing industry performance of the economic growth was announced. According to the survey results where any figure greater than 50.0 indicates overall improvement of the sector, the headline PMI posted 52.5 in September, down from 54.1 in August but still signalling a solid monthly improvement in operating conditions in the sector. Business conditions have now strengthened in four consecutive months, in line with sustained growth of output and new orders during this period. That said, slower increases were recorded in September.

Total new business volumes were supported by a further marked rise in new export orders. Growth of new orders and efforts to expand capacity led firms to increase their staffing levels again in September, and at a solid pace. Despite this, backlogs of work increased for the first time since July 2020 amid a sustained expansion of new work. Manufacturers also raised their purchasing activity in line with higher output requirements, and stocks of purchases were accumulated for the second month running. Moreover, the rate of increase in pre-production inventories was the fastest since the end of 2017 amid some reports of safety-stock building to guard against ongoing supply-chain disruption. There were some signs that supply-chain delays moderated at the end of the third quarter. Although raw material shortages and delays importing items contributed to a further lengthening of suppliers’ delivery times, the latest deterioration in vendor performance was the least marked for a year. Input costs continued to rise sharply, with firms reporting ongoing increases in raw material prices amid supply shortages. Currency weakness was also a factor pushing up input costs, which increased at a broadly similar pace to that seen in August. In turn, manufacturers continued to raise their own selling prices rapidly, with the rate of inflation ticking up slightly during the month.

Commenting on the Istanbul Chamber of Industry Türkiye Manufacturing PMI survey data, Andrew Harker, Economics Director at IHS Markit, said:

“Turkish manufacturers were able to build on the recent rebounds in output and new orders in September, recording ongoing expansions in both. In fact, the sustained period of rising new orders has begun to put pressure on operating capacity despite the fact that firms continued to take on extra staff. There were some signs that supply-chain disruption is not as pronounced as earlier in the year, but firms still had to face longer lead times and sharp price rises when attempting to secure inputs. As part of efforts to guard against these problems, stocks of purchases were raised to the greatest extent since the end of 2017. This should provide some assistance to efforts to keep on top of workloads in the months ahead.”

Most of the sectors increased their output with the most in clothing and leather products

According to the PMI® survey data of September from Istanbul Chamber of Industry, there were signs of improvement in demand conditions in especially export markets and most of the monitored sectors posted growth of output. Input costs continued to rise broadly with ongoing supply-chain disruptions.

With the recent strong recovery observed in output, the clothing and leather products sector posted the fastest output rise among all the sectors. Main metals and textile also saw strong rises. However, the output continued to drop in non-metallic mineral products sector, while the growth came to a halt in food products and land and sea vehicles sectors. 

New orders increased in most of the sectors. The fastest growing sector in new orders was again the clothing and leather products sector as it was the case in output. One of the general results of the latest survey was that the improvement in international demand supported the total new orders. New export orders increased in nine sectors, with the exception of land and sea vehicles sector.

Main metals and machinery and metal products sectors led the rise in employment at the end of the third quarter. Expansion of capacity led the firms in most of the sectors to manage their workloads in general. Backlogs of work increased only in chemicals, plastics and rubber sectors. 

The supply-chain disruptions continued to negatively affect the business activities. All of the monitored sectors saw longer lead times. Longest lead times were seen in machinery and metal products sector.

The difficulties faced in supply side led to more inflationary pressures and the rate of input costs inflation remain elevated. The highest rise was seen in the non-metallic mineral products sector which was followed by the chemicals, plastics and rubber products sector. All of the ten sectors had increases in sales prices, with the highest one being in non-metallic mineral products sector. The number of sectors where input stocks were increased or decreased was the same, signalling some efforts of stock accumulation. However, in the machinery and metal products sector and the main metals sector, the stocks remained stagnant after a long-term drop.