According to the data announced by the Istanbul Chamber of Industry (ISO) and S&P Global; Manufacturing PMI fell from 46.9 to 46.4 in October. The headline PMI remained below the 50 threshold for the eighth consecutive month, signaling a sharp slowdown in industry performance. This slowdown was the most significant slowdown since May 2020. In October of last year, PMI was realized as 51.2. The continued loss of momentum, which reached the 13th month due to the low demand for new orders, was effective in the deterioration in operating conditions.
If we look at the details of the PMI data; Although new orders came to 43.5 from 43 index value, significant loss of momentum continued. Similarly, new export orders slowed markedly. Production, employment and purchasing activities were limited. Weakness in demand affected the production side. However, the slowdown in production was measured at the most moderate level since May. In October, producers reflected the slowdown in new orders to their purchasing activities and number of employees. Therefore, a decline is observed in the employment component. Supplier delivery times have been shortened for the first time in 34 months. The decrease in input purchases has helped relieve pressure on supply chains and has played a role in reducing delivery times.
Input costs and finished product prices continued to rise sharply in October. However, inflation in both decreased compared to the previous month. The rise in input costs was largely driven by currency weakness, and increases in energy and raw material prices were also reported. With the companies reflecting the increase in input costs to their customers, finished product prices also increased.
Turkey PMI Index Source: Source: Istanbul Chamber of Industry, S&P Global, Tera Yatirim
In the economic trend surveys conducted last week, there were serious decline expectations compared to the current situation in the last 3 months compared to the next 3 months. In the details of the announced PMI data, it is seen that the decrease in orders in the coming period has become clear. PMI reveals that the slowdown that started in 3Q22 continued with increasing momentum in 4Q22, especially as the data is highly correlated with industrial production. Looking at prices, both the slowdown in demand and the decline in global commodity prices seem to have lowered unit cost expectations. In an environment where demand continues to slow down, uncertainty regarding activities and prices continues as supply pressures continue to be intense. Although all data clearly point to a slowdown, we think that monetary and fiscal policies can continue along this axis to support growth.
Kaynak: Tera Yatırım-Enver Erkan
