Türkiye's factory activity showed signs of improvement in February as declines in output, employment and inventories eased, while new orders neared stabilization suggesting improving customer demand, a survey showed on Monday.

The Istanbul Chamber of Industry Türkiye Manufacturing Purchasing Managers' Index (PMI) rose to 49.3 in February, up from 48.1 in January. While still below the 50.0 threshold that indicates growth, the figure is at the highest level since April 2024, when the current period of moderation began.

New orders, a key indicator of demand, slowed by the smallest extent in almost two years. The panel said higher prices were sometimes the cause of an easing of demand.

Inflationary pressures continued to build with both input costs and output prices up sharply during the month, the survey showed. Input costs increased sharply due to new price hikes by suppliers, while a rise in the minimum wage added to staff costs, the panelists' said.

"Although the latest manufacturing PMI data for Turkey continued to signal moderating business conditions in the sector, there are definite reasons for optimism in the latest figures," said Andrew Harker, Economics Director at S&P Global Market Intelligence.

"New orders neared stabilization, with a number of firms pointing to signs of improving customer demand. In turn, output slowed to a lesser extent, suggesting that we will see an upturn in official data in the coming months."