Skip to content Skip to Search
Skip navigation

Turkish manufacturing faces stifling cost pressures

The number of people employed in Turkey’s construction sector hit 1.973 million between April and June Reuters
The number of people employed in Turkey’s construction sector hit 1.973 million between April and June
  • Turkish PMI for manufacturing was 51.5 in June, showing growth
  • Job creation rose to meet production demand and for reconstruction
  • Weak lira and cost pressures meant order growth was ‘only marginal’

Turkish manufacturing output grew by the end of the second quarter, but new order growth softened and price pressures mounted because of currency depreciation, the latest industry tracker showed. 

The headline Purchasing Managers’ Index (PMI) for manufacturing, from Istanbul Chamber of Industry and S&P Global, stood at 51.5 in June.

This was the same as the previous two months and remained above the 50-point line that separates expansion from contraction.

The PMI is derived from indicators such as new orders, output, employment levels, supplier delivery times and stocks of purchases. 

June’s figure signalled “a further modest improvement in the health of the manufacturing sector”, as business conditions have now improved in each of the past six months, the report noted.

In particular, output was up for the fourth consecutive month, with the rate of growth the fastest since July 2021. 

The rise in production was attributed to higher demand and the country’s ongoing recovery from the February earthquake. There was also an uptick in business activity following the election period, which ended with the surprise re-election of Recep Tayyip Erdoğan at the end of May.

New orders rose for the fourth month running, but the rate of increase was “only marginal and the softest in the current sequence of expansion”.

The report said this was partly a result of the depreciation of the Turkish lira against the US dollar, which is contributing to cost pressures overall.

Exchange rate fluctuations pushed up both input cost and output price inflation in June – the former rose at the fastest pace in almost a year, according to the index. Meanwhile, suppliers’ delivery times increased as vendors struggled to meet demand. 

Backlogs of work increased for the second time in the past three months, while job creation rose as firms took on more staff to help meet higher production requirements. 

Andrew Harker, economics director at S&P Global Market Intelligence, said Turkish manufacturing production “kicked on nicely in June, and the goods-producing sector as a whole finished the first half of the year in broadly positive shape as demand improved further”. 

However, he added, “the familiar foe of currency weakness” limited growth in new orders and halted the recent easing of inflationary pressures. 

“More positively, manufacturers continued to expand their employment levels and purchasing activity, suggesting that they remained optimistic about prospects for the second half of the year.”

Latest articles

ADQ's holdings include Abu Dhabi National Energy Company (Taqa) and are worth almost $200 billion

ADQ: how Abu Dhabi’s ‘baby’ fund is finding its feet

Abu Dhabi sovereign wealth fund ADQ may be the younger, smaller sibling of ADIA and Mubadala but there are no signs of an inferiority complex as it executes billion-dollar deals at home and overseas. Most notable was the $35 billion agreement signed with the Egyptian government in February this year to develop Ras El Hekma, […]

Suriname oil

QatarEnergies buys into Suriname oil expansion

The state-owned giant QatarEnergy has signed a deal with US oil company Chevron to acquire a 20 percent interest in a production-sharing contract for an offshore concession in the South American country of Suriname. Chevron will keep a 40 percent interest in Surname’s block 5, as will Paradise Oil, an affiliate of Suriname’s national oil […]


Rakbank plans first bond to fund social projects

The National Bank of Ras Al Khaimah (Rakbank) is planning to launch its first social bond issuance, a news report has said. The Abu Dhabi-listed bank is seeking bids for the five-year benchmark-sized dollar-denominated bond, Reuters reported. The initial price was set at 170 basis points over US Treasuries, with the final pricing expected on confirmed […]

The proposed sharia standard 62, which aims to transition the industry towards asset-backed sukuk, will not affect 2024 issuance, says S&P

Sharia standard 62 may disrupt sukuk market, says S&P

Global sukuk issuances are likely to suffer next year if the proposed standard 62 sukuk changes to sharia guidelines are implemented, according to credit rating agency S&P. “Adopting Accounting and Auditing Organization for Islamic Financial Institutions standard 62 guidelines as they have been presented could disrupt the market,” it said in a new report. The […]