Turkish manufacturing sector, purchasing manager index (PMI) signalled a stagnation in business conditions in the sector at the start of 2015, according to the statement on HSBC Turkey Manufacturing PMI, released by Markit on Monday.
"Output, new orders, exports and purchases of inputs all declined in January, although employment continued to rise sharply. The latest survey results also indicated weakening inflationary pressure" said in the statement.
The headline HSBC Turkey Manufacturing PMI is a composite single-figure indicator of manufacturing performance. Any figure greater than 50.0 indicates overall improvement of the sector.
Melis Metiner, Chief Economist at HSBC Turkey, said, "Manufacturing conditions showed stagnation in January. New orders and new export orders fell, but input price pressures continued to moderate and job creation remained strong. Firms stated that lower export orders were related to instability in the Middle East and Ukraine" and added:
Downside risks for Turkish export performance in 2015
"Official data published by the statistical office shows that Turkey's exports to the Middle East fell by 1 percent in annual terms in the January-November 2014 period, while exports to Russia were down by 14 percent and exports to Ukraine were down by 20 percent. Exports to the European Union, on the other hand, rose by 9 percent. For 2015, the subdued growth outlook in the eurozone and a weaker EUR pose downside risks for Turkish export performance. Domestic demand growth, on the other hand, could accelerate in the early part of the year, on the back of monetary easing."
Marginal deterioration in manufacturing business conditions
The PMI had fallen for the second month running to 49.8 in January, from 51.4 in December, according to the PMI data, which had signalled a marginal deterioration in manufacturing business conditions and ended a fivemonth sequence of improvement. "The strength of the latest downturn was weaker than that registered in June and July last year, mainly reflecting comparatively stronger employment growth at the start of 2015."
Output declined for the first time in six months
A key factor behind the deteriorating business climate in January had been a renewed fall in the volume of new orders, following a four-month sequence of modest expansion, while new export business contributed to the overall decline, falling at the strongest rate since July 2013. Output declined for the first time in six months, although the rate of contraction had been only modest and output had been partially supported by the completion of existing contracts. Employment had remained a bright spot in January, with the rate of job creation broadly matching December's threeyear high while manufacturers had added to workforces continuously since mid-2009.
Weakening of inflationary pressure in the goods-producing sector
"The latest survey results highlighted a weakening of inflationary pressure in the goods-producing sector" the statement said. "Input prices increased, but at the weakest rate in the current 68-month period of rising average costs. Firms reported that the weaker lira-dollar exchange rate continued to pressurise import prices in general, but also a deflationary impact from falling oil prices. Meanwhile, prices charged for finished Turkish manufactured goods were broadly unchanged for the second month running."
Turkish manufacturers reported a fall in the volume of new inputs ordered in January, ending a five-month sequence of modest purchasing growth. This resulted in the fastest drop in pre-production inventories since October 2009. - Istanbul