Turkish Manufacturing Continues To Contract In February

- Turkey's purchasing managers’ index (PMI) fell for a second successive month in February, due to a steeper drop in output than in January and longer supplier delivery times, according to the Turkish PMI survey data prepared by Markit for HSBC.

HSBC Turkey Manufacturing PMI is a composite single-figure indicator of manufacturing performance. It is derived from indicators for new orders, output, employment, suppliers’ delivery times and stocks of purchases. The PMI registered below the no-change mark for the second straight month in February, and fell slightly to 49.6 from 49.8 in January.

"That was the lowest figure in seven months, but signalled only a marginal overall deterioration in business conditions in the goods-producing sector" said in the statement on the PMI data. "Weighing on the PMI in February were falling output, new orders and stocks of purchases, while positive contributions were provided by employment and suppliers’ delivery times."

Manufacturing output in Turkey fell for the second month in February, according to the PMI data, while the rate of contraction accelerated from January’s modest pace to the fastest since April 2009, while the volume of new orders also devreased for the second successive month in February.

Commenting on the Turkey Manufacturing PMI survey, Trevor Balchin, Senior Economist at Markit, said, Turkey’s manufacturing economy had remained in a mild downturn in February. "At first glance the steep drop in output looks alarming, but this can partly be attributed to severe weather during the month, which also impacted on suppliers’ delivery times" he said and added:

"Other survey indicators were less worrisome – the contraction in new orders eased during the month and firms continued to expand workforces at a robust pace. The two price indicators rose but remained at relatively low levels, lending support to the recent decision to cut interest rates."

Unlike output, the rate of decline eased slightly since January and was modest. New export orders followed a similar trend to that shown for total new work. With incoming new business continuing to fall, firms completed existing work at the fastest rate since July 2013.

Severe winter weather had impacted on supplier operations in February, the statement said, while the volume of inputs ordered by manufacturers rose only fractionally following January’s decline, but supplier delivery times lengthened to the greatest extent since October 2011.

"Input price inflation rose to a three-month high in February, linked to the weaker lira driving up import prices. That said, input price inflation remained slower than the long-run survey average, as did inflation of prices charged for final manufactured goods" the statement said.