Activity in the Turkish manufacturing sector contracted for the 10th month running in December but showed some tentative signs of improvement, a closely-watched survey showed Monday.
The Purchasing Managers’ Index (PMI) for manufacturing stood at 48.1 in December, up from 45.7 in November, the Istanbul Chamber of Industry and S&P Global said.
Last month saw softer moderations in output and new orders, while employment increased at the fastest pace since February 2022, the panel said. Meanwhile, inflationary pressures remained much more muted than earlier in the year, it added.
The reading was the highest since June, yet it remained below the 50-point line that separates contractions from expansions in activity.
"Although still signaling a moderation in business conditions over the month, the latest reading was the highest since June and signaled a modest softening in the health of the manufacturing sector," the panel said.
Signs of improvement were evident in terms of demand, with total new orders slowing to the lowest extent in almost a year, it noted.
It said there were some reports that inflationary pressures continued to weigh on demand, while global market weakness meant that new export orders moderated to a greater extent than total new business.
"While demand remains fragile, particularly internationally, cost pressures are not as extreme as earlier in 2022 and supply-chain conditions are improving, hopefully providing a tail wind to the sector heading into 2023," the panel said.
Input buying moderated at a much slower pace than a month earlier, while the signs of improvement supported a second consecutive month of employment growth, with staffing levels showing the sharpest rise in 10 months, the panel of contributors said.
Input cost inflation remained relatively muted in December, while output prices rose at the same pace as in the previous survey period at a rate much softer than earlier in the year, the panel said.
Suppliers’ delivery times shortened to one of the greatest extents on record due to weak demand for inputs and reduced port disruption, they added.
The panel noted that an eighth successive rise in stocks of finished goods extended the longest sequence of accumulation in the survey’s history, but was only fractional.
"There were some tentative signs of improvement in the latest PMI survey, which if continued into the new year could see the Turkish manufacturing sector gaining some ground," said Andrew Harker, economics director at S&P Global Market Intelligence.
"While demand remains fragile, particularly internationally, cost pressures are not as extreme as earlier in 2022 and supply chain conditions are improving, hopefully providing a tail wind to the sector heading into 2023."