Prime Highlights
Turkey’s manufacturing PMI improved to 49.1% in December from 48.3% in November, signaling a slower contraction and potential demand recovery, although employment declined again.
Production in the sector decreased at its weakest pace in nine months, which may be an indication of a pick-up in demand.
Employment in the manufacturing sector declined again in December, after having increased in November.
Key Background:
The Turkish manufacturing sector experienced its slowest contraction in eight months in December, signaling potential stabilization, according to a recent business survey. The Purchasing Managers’ Index (PMI) for December rose to 49.1, up from 48.3 in November, approaching the neutral 50.0 mark that separates growth from contraction. This trend suggests that the sector may be on the verge of recovery after a challenging period.
The survey, conducted by the Istanbul Chamber of Industry and S&P Global, revealed a slower decline in production, marking the least significant drop in nine months. This indicates a slight improvement in demand within the manufacturing sector. While overall business conditions continued to moderate, the pace of decline eased, suggesting a potential turnaround as 2025 begins.
Andrew Harker, Economics Director at S&P Global Market Intelligence, noted that December’s PMI data provided optimism for the sector’s future, emphasizing that the slowdown in key metrics was marginal and that signs of improvement were visible across various areas of the survey. Although demand remained subdued, the reduction in the pace of new orders and purchasing pointed to a gradual recovery.
Despite these positive developments, employment in the manufacturing sector saw a renewed decline, reversing the increase observed in November. This shift in employment patterns reflects ongoing challenges, although the broader outlook remains hopeful.
Additionally, input costs surged due to higher raw material prices, adding pressure on manufacturers. However, the inflation in output prices moderated to its lowest level in over five years, as some firms resorted to offering discounts to stimulate demand. If the current momentum continues into 2025, the Turkish manufacturing sector could return to growth, supported by a more stable inflation environment compared to previous years.