The recovery of Turkey’s manufacturing sector continued in August, a closely watched business survey showed Tuesday, as improvements in customer demand supported further marked increases in output and new orders.

The headline Purchasing Managers' Index (PMI) declined to 54.3 in August from 56.9 in July, according to survey data from the Istanbul Chamber of Industry (ISO) and London-based global data firm IHS Markit, remaining comfortably above the 50 mark that separates expansion from contraction.

Commenting on the August reading, Industry and Technology Minister Mustafa Varank said Turkey had emerged in a positive situation, leaving other countries, such as the U.S., Sweden, China, Germany, Ireland, India, Russia and Indonesia, behind.

"Eight out of ten sectors posted growth," Varank said, underlining that the largest rise was seen in the basic metal industry.

Beginning in March, Ankara shut schools and businesses, including many factories, closed borders and adopted weekend stay-home orders. Much of the economy was reopened in June as most of the lockdown measures were lifted.

Customer demand has increased in recent months as COVID-19 restrictions were eased, the panel said, adding that new orders rose at a pace that was among the fastest in the past two-and-a-half years. New exports and production also increased.

Companies increased purchasing activity and employment in August in line with higher output and new orders, it said.

The depreciation of the lira has led to higher input costs and, as a result, output prices have also shot up, the panel said. Input cost inflation rose to its strongest since October 2018, leading companies to raise their selling prices to the greatest extent in 23 months.

After rising at a very steep pace in over nine years in July, the pace of expansion in production softened but remained sharp, it noted.

"Turkish manufacturers were able to largely sustain the strong pace of growth seen in the previous month during August, with the latest PMI data suggesting that the sector continued to make inroads into the output lost during the COVID-19 downturn," said Andrew Harker, economics director at IHS Markit.

"Helping firms to expand output further was another month of job creation. Less positive were signs of building inflationary pressures, with both input costs and output prices rising at the sharpest rates for just under two years."

Shaking off COVID-19

On the other hand, factories across Europe and Asia also continued to shake off the coronavirus gloom in August as the global economy gradually emerged from a downturn triggered by the health crisis, thanks in part to massive fiscal and monetary stimulus programs.

Surveys showing an expansion in manufacturing activity may reduce pressure on policymakers to take bolder steps to avert a deeper recession. Many analysts expect the recovery to be feeble, however, as renewed waves of infections curb business activity and prevent some nations from fully reopening their economies.

Fears of a resurgence in infections in some economies may discourage firms from boosting capital expenditure and delay a sustained rebound, some analysts say.

"In most major economies, except for China, factories are still running well below pre-pandemic capacity levels," said Ryutaro Kono, chief Japan economist at BNP Paribas.

"The recent recovery is largely due to pent-up demand after lockdown measures were lifted, which will dwindle ahead."

Eurozone manufacturing activity remained on a recovery path last month but factory managers were wary about investing and hiring workers as the pandemic rages on.

Manufacturing output, which did not suffer quite as sharp a decline as the services industry during coronavirus lockdowns, increased for a second straight month.

The PMI dipped to 51.7 in August from July’s 51.8, in line with an earlier flash reading.

"With concerns about double-dips increasing and virus cases up across Europe, the PMI – especially on the services side – provides reason to worry about the pace of the recovery and perhaps even a reversal of output growth," said Bert Colijn at ING.

The recovery of German manufacturers from lockdown measures continued last month, but in France activity has slumped once again as the second-biggest eurozone economy grapples with hits to business caused by the pandemic.

British factory output recovered some ground lost as output rose at the fastest pace in more than six years.

Stronger China

Manufacturing activity in China expanded at the fastest clip in nearly a decade in August, as factories ramped up output to meet rebounding demand, a private survey showed. New export orders rose for the first time this year.

The upbeat findings contrasted with an official survey Monday, which showed China's factory activity grew at a slightly slower pace in August.

China's Caixin/Markit PMI rose to 53.1 in August from July's 52.8, marking the biggest rate of expansion since January 2011.

Japan and South Korea both saw factory output contract at the slowest pace in six months, reinforcing expectations the region's export powerhouses are past the worst from a collapse in demand after COVID-19 struck.

The spill-over to other parts of Asia, however, remains patchy. While manufacturing activity rose in Taiwan and Indonesia, it slid in the Philippines, Vietnam and Malaysia.

India's factory output grew in August for the first time in five months as the easing of lockdown restrictions spurred demand. But analysts do not expect a quick turnaround in the economy, which contracted at its steepest pace on record last quarter.

While South Korea's exports fell for a sixth straight month in August, trade data – the first to be reported among major exporting economies – signaled a gradual recovery in global demand.