Turkish factory activity contracts for third straight month in May

Turkish manufacturing activity contracted for the third month running in May as both output and orders slowed amid muted demand and ongoing price pressures, a business survey showed on Wednesday.

The Purchasing Managers’ Index (PMI) for manufacturing stood at 49.2 in May, unchanged from April, said a panel from the Istanbul Chamber of Industry and S&P Global, staying below the 50-point line that separates expansion from contraction.

New orders slowed, led by export orders which eased to the greatest extent in two years with some manufacturing firms highlighting an economic slowdown in Europe.

Companies continued to raise employment to expand capacity and reduced backlogs of work in May while manufacturers also built stocks. Stocks of finished goods ended an eight-month period of depletion, the panel showed.

Input costs increased sharply amid rising raw material prices and exchange rate fluctuations, firms said, which was reflected in output prices although their rise was slower. Firms also reported an easing of supply-chain disruptions, according to the survey.

“Demand in the Turkish manufacturing sector remained subdued in May amid the familiar headwinds we’ve seen in recent months, with firms also struggling to secure export business amid an economic slowdown in Europe,” said Andrew Harker, economics director at S&P Global.

“That said, there were some signs that doing business might start to get easier soon … A sustained period of job creation means that firms will be ready should these tentative improvements result in renewed order growth.”