Türkiye's manufacturing sector improved slightly in July but remained in contraction, as subdued market conditions and softer domestic and international demand prompted firms to cut output and ‌jobs, a business survey showed on Monday.

The Istanbul Chamber of Industry (ISO) Türkiye Manufacturing PMI, compiled by S&P Global, rose ​to 47.7 in July from 47.1 in June, ​the survey showed. The 50-mark separates growth from ⁠contraction.

Last month signaled a further solid moderation in the health of the manufacturing sector, said the panel, adding that business conditions have now eased in 28 successive months.

"The second half of 2026 began in much ​the same way as the first half ended, with ​Turkish manufacturers struggling to generate growth amid a muted demand environment, exacerbated by the war in the Middle East," said Andrew ​Harker, economics director at S&P Global Market Intelligence.

New ​orders fell markedly again, though the pace of decline eased slightly ‌from ⁠June. Firms linked softer demand to subdued market conditions and price pressures, while the war in the Middle East weighed on export demand.

Production declined for a ​second straight ​month, although ⁠only modestly, the survey showed. Employment also fell, with some firms citing workers resigning ​from their positions.

Purchasing activity and inventories were ​reduced ⁠in response to muted demand, the survey showed.

Inflation pressures softened further in July. Input costs rose at the ⁠slowest ​pace since November 2025, while ​the rate of increase in output prices was the weakest so far ​in 2026.

"Manufacturing production did at least moderate to a lesser degree than in June, signalling a more stable picture. Also positive was a further easing in the rate of input cost inflation which provided some breathing space for firms to limit rises in selling prices in order to try to stimulate demand," S&P Global's Harker said.