The results of the Istanbul Chamber of Industry (ISO) Turkey Manufacturing PMI (Purchasing Managers Index) survey for the November 2023 period have been announced. According to the survey results, where all figures measured above the threshold value of 50 indicate an improvement in the sector, the headline PMI, which was 48.4 in October, decreased to 47.2 in November 2023 and remained below the 50 threshold value for the fifth consecutive month. This slowdown was at its most significant level in the last year.
Stagnant market conditions both at home and abroad led to the continued loss of momentum in new orders in the middle of the last quarter, thus recording the sharpest slowdown since November 2022. Due to the weakening in demand, manufacturers reduced production by the highest rate in the last year. According to survey participants, geopolitical tensions and difficulties in supplying raw materials also contributed to the decline in production. The decline in production led manufacturers to shrink employment for the second consecutive month, while layoffs and retirements also contributed to the decline. Although the decline in employment was moderate, it was at the highest rate since October 2022. November data indicated that employment in the Turkish manufacturing sector contracted on a monthly basis for the second consecutive year. Although the decrease was slight, it was recorded at the highest level in more than a year. Survey participants stated that the decline in employment was due to insufficient workload, resignations and retirements.
“IT IS WORRYING THAT THE SLOWING DOWN IS BECOMING APPARENT”
In addition to purchasing activities, a decrease was observed in companies’ input and final product stocks in November. Although input cost inflation fell to its lowest level in the last six months in November, it continued to remain at high levels. Feedback received from companies showed that the increase in raw material prices due to the depreciation of the Turkish Lira was effective in this development. As a result, manufacturers also increased their final product prices, but the rate of increase did not change compared to the previous survey period.
Evaluating the Istanbul Chamber of Industry Turkey Manufacturing PMI survey data, S&P Global Market Intelligence Economics Director Andrew Harker said:
“Turkey Manufacturing PMI data is worrying as it shows that the slowdown in the sector is becoming more evident as the end of the year approaches. “The widespread demand weakness both at home and abroad makes it increasingly difficult for companies to receive new orders, and this leads to a reduction in production, employment and purchasing activities.”
GROWTH WAS LIMITED TO THREE SECTORS
Rapou pointed out that the weakness in the operating conditions of the manufacturing industry was widespread in November. While a limited number of sectors showed signs of recovery during the month, a significant slowdown was recorded, especially in clothing and leather products. While the production volume of the clothing and leather products sector decreased at the highest rate since the first wave of the COVID-19 epidemic in November, there was a slowdown in six more sectors, thus growth was limited to only three sectors. Land and sea vehicle production improved and recorded a strong increase for the first time in the last three months. Moderate increases were seen in food products and non-metallic mineral products.
While three sectors, led by food products, increased their new order volume, orders for electrical and electronic products remained flat after the decrease in the previous month. New orders decreased in the majority of sectors, but given that the decline was spread across all sectors in October, this represented a relative improvement on a monthly basis. Growth in new export orders was observed only in the food products and machinery and metal products sectors.
LOSS OF MOMENTUM IN PURCHASING
Although some sectors increased employment, the sectors that experienced a decrease remained in the majority by a narrow margin. The sharpest loss in employment occurred in clothing and leather products, and this decline was recorded at the fastest pace in more than three and a half years. Similar to employment, purchasing activities also lost momentum in six out of ten sectors in November. Input cost inflation remained high in general due to the increase in exchange rates pushing up raw material prices. While the fastest increase was seen in food products, the most moderate increase was in base metals. Base metals was also the sector where final product prices increased at the lowest rate. This increase followed the decline experienced in the previous survey period. The sharpest increase in sales price inflation was recorded in machinery and metal products.
The data signaled that the pressure on supply chains has eased with the weakening in input demand. While delivery times shortened in three sectors, the most significant improvement was seen in textiles. The increase in lead times accelerated only in the machinery and metal products and basic metal sectors.