The Turkish manufacturing sector showed signs of continued slowing by the end of the first quarter, a survey showed on Wednesday, with output and new orders continuing to ease amid difficult market conditions both domestically and internationally.
The Purchasing Managers' Index (PMI) slipped to 47.3 in March from 48.3 in February, marking the lowest reading since October last year, the survey compiled by Istanbul Chamber of Industry and S&P Global said. A PMI reading below 50 indicates a contraction in activity.
March extended the sequence of moderating business conditions to one year.
The headline Türkiye 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.
March marked the 21st consecutive month of declining new orders, with the slowdown being the most pronounced since last October, the survey said. New export orders fell at the fastest pace since November 2022.
"Challenging market conditions both at home and abroad meant for further moderations in output and new orders in March as Turkish firms struggled to secure business," said Andrew Harker, Economics Director at S&P Global Market Intelligence.
“There was a lack of pressure on capacity across the sector, with suppliers able to speed up deliveries to the greatest extent since December 2022. Inflationary pressures remained marked, however, as firms had to contend with the ongoing impacts of currency weakness," Harker noted.
Despite the downturn, there were signs of stabilization in some areas. Inventory levels held steady after 10 months of depletion, and suppliers' delivery times improved for the first time in six months, reflecting reduced demand for inputs.
Input costs continued to increase sharply in March, largely as a result of currency weakness, the survey said. The pace of inflation eased, however, and was at a three-month low. Output prices also rose at a slower rate, and one that was the softest in the year-to-date.
Employment in the sector also saw a slight reduction for the fourth consecutive month, though the decrease was the smallest so far this year.
Manufacturers remain cautiously optimistic about future output, hoping for improvements in new orders and demand from the construction sector over the coming year.
