Turkish Manufacturing Continues To Contract İn March (2)

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Turkey's purchasing managers' index (PMI) fell for a third successive month in March, due to a steeper drop in output than in February and longer supplier delivery times, according to the Turkish PMI survey data prepared by Markit for HSBC.

HSBC Turkey Manufacturing PMI is a composite single-figure indicator of manufacturing performance. It is derived from indicators for new orders, output, employment, suppliers' delivery times and stocks of purchases. The PMI registered below the no-change mark for the third straight month in March and fell to 48.0 from 49.6 in February, the lowest since April 2009 and indicative of a marked overall deterioration in operating conditions. Four of the headline index's five components exerted negative contributions in March, the exception being stocks of purchases.

"Output fell at the fastest rate since early-2009"

"The March survey results suggest that February's downturn in the Turkish manufacturing sector was more than just a weather-related blip. Output fell at the fastest rate since early-2009, driven by a steeper drop in new business" said Trevor Balchin, Senior Economist at Markit. "Official industrial production declined 2.2 percent year-on-year in January, and the PMI Output Index suggests this negative trend will continue over the rest of the quarter."

"Rise in the input prices was the second-largest observed in seven years"

The other key finding from the survey was the sharp acceleration in input price inflation at goods producers, which had been linked by companies to the strengthening dollar exchange rate, he said. "The near-seven point rise in the Input Prices Index in March was the second-largest observed in seven years."

Turkish manufacturing PMI survey data from HSBC signalled a steepening downturn in the goods-producing sector in March, the repot said. "Output, new orders and new export orders all fell at sharper rates during the month, and employment failed to grow for the first time in nearly six years."

"The pace of contraction accelerated to the sharpest since August 2011"

Purchasing activity had remained broadly unchanged as firms faced the dual headwinds of declining demand and a steeper increase in input prices had been linked to the stronger dollar, meanwhile, stronger cost pressures had led to the steepest increase in prices charged for manufactured goods in nearly a year.

"New orders received by Turkish manufacturers fell for the third month running in March. Moreover, the pace of contraction accelerated to the sharpest since August 2011" the report said. "The same trend was evident for new export orders, despite the weakening of the lira against the US dollar. Firms generally commented on weak domestic and international market conditions."

"Job creation in the sector that stretched back to June 2009"

Weakening inflows of new work impacted on production in March and output fell for the third month running and at the strongest rate since April 2009, according to the survey findings. "The volume of outstanding business also fell sharply during the latest period. Survey data indicated a stagnation in manufacturing employment in March. That ended a sequence of continuous job creation in the sector that stretched back to June 2009" it said.

"Input price inflation was accelerated sharply to the fastest since March 2014"

"Cost pressures intensified in March" it added, while Input price inflation was accelerated sharply to the fastest since March 2014, with companies widely attributing higher prices to the strengthening US dollar.

The stronger US dollar also had influenced firms' purchasing decisions in March, with the overall volume of inputs ordered broadly unchanged since February, it said. "Suppliers' delivery times improved slightly as a result, and weak demand for inputs was signalled by an overall rise in input stocks for the first time since February 2014." - Istanbul