Türkiye: June manufacturing PMI unchanges at 51.5

According to the data announced by the Istanbul Chamber of Industry (ISO) and S&P Global; Manufacturing PMI was unchanged at 51.5 in June. The fact that the PMI remained constant at 51.5 in June is remarkable in that it shows that the manufacturing sector maintains its positive momentum. It indicates that the general business conditions and sentiment in the manufacturing industry remained relatively positive during this period. The fact that the PMI remained above 50 for the sixth consecutive month also indicates that the recovery signal in economic activity continues. In June of last year, the PMI was 48.1.

If we look at the details of the PMI data; new orders fell to 50.2 from 52.3 in May and remained in expansion territory for the fourth consecutive month, the lowest reading since February 2023. This shows that both local and international demand for manufactured goods continues. Higher total orders and exports may contribute to the overall improvement in the manufacturing sector, as it indicates stronger demand for goods produced by manufacturers. There may be some cooling in domestic demand in the coming period, but foreign demand may have a positive effect despite the negativities in the global markets, as the increase in exchange rates will also support the increase in exports.

Cost increases are accelerating due to the depreciation of the Turkish Lira (TL). Due to the high pass-through in exchange rates, both PPI and CPI will remain high in the upcoming period. In this environment, the continuation of growth will not be positive in terms of inflationary pressures. Currency depreciation can lead to higher input costs for manufacturers, especially if they rely on imported raw materials or intermediate goods. This increase in costs can be a challenge for manufacturers as it can reduce profit margins and potentially lead to higher prices for consumers.

Employment in the manufacturing sector increased for the second month in a row. This indicates that manufacturers are expanding their workforce, which is a positive sign for job creation and economic growth. Rising employment shows that manufacturing companies are confident in the sustainability of the recovery and are investing in their operations. The resumption of acquisitions probably indicates an increase in the investment and purchasing activity of the businesses. Increased acquisitions demonstrate increased business confidence and a willingness to invest in expanding operations or replacing obsolete equipment, which can further stimulate economic activity.

Türkiye PMI Index… Source: Istanbul Chamber of Industry, S&P Global, Dinamik Yatırım

The expansion in manufacturing industry production indicates that output levels increased in this period. This expansion may be driven by factors such as increased demand, recovery from the effects of the earthquake, and generally improved business conditions. The manufacturing PMI of 51.5 in June 2023 is stable, indicating that the recovery in economic activity in the manufacturing sector continues. Despite the difficulties caused by the depreciation of TL, positive developments such as increase in employment, expansion in production, increase in total orders and exports, and resumption of purchases were experienced in the sector. These factors collectively contribute to the overall improvement in the manufacturing sector and present a positive outlook for the economy. With this outlook, PMI may continue to stay above 50 in the coming months.

Kaynak Enver Erkan- Dinamik Yatırım

Hibya Haber Ajansı