ICI Turkish Manufacturing PMI July 2020 Report and Turkish Sectoral PMI Report Were Announced
The results of Istanbul Chamber of Industry Turkey Manufacturing PMI survey (Purchasing Managers Index), the fastest and most reliable reference for the manufacturing industry’s performance that is the leading indicator of economic growth that realized as 56,9 in July which was the highest level since February 2011. PMI pointed out to a strong recovery following the recessions in March, April and May.
According to the July data of Istanbul Chamber of Industry Turkish Sectoral PMI, refreshment maintained its existence in manufacturing industry sectors and a strong recovery was experienced in the operational conditions of many sub-sectors. Besides, a particular separation was observed in tendencies of several sectors since they continued to have difficulty because of coronavirus. Eight of ten sectors followed recorded a production increase in July.
The results of Istanbul Chamber of Industry Turkey Manufacturing PMI survey (Purchasing Managers Index), the fastest and most reliable reference for the manufacturing industry’s performance that is the leading indicator of economic growth were announced for the term of July 2020. Based on the survey results where all figures measured over 50,0, the threshold value point out to sectoral improvement, PMI that was recorded as 53,9 in June realized as 56,9 in July and which was the highest level since February 2011. PMI pointed out to a strong recovery following the recessions in March, April and May.
Since the conditions continued to be normalized and customers started their operations again, increase in new orders of Turkish manufacturers was experienced for the second month successively. Besides, the expansion was observed to gain speed and one of the fastest growth rates since June 2005 was recorded. New export orders demonstrated a moderate increase compared to the total new orders in this period. Production recorded growth in July like in the previous month. This increase realized in the highest rate since February 2011 and 31 percent of the firms notified that the production increased.
The first increase of accumulated works since August 2017 pointed out that recovery in new orders started to create a pressure on the capacity. Firms used their stocks to meet the order demands and it caused the most particular decrease of the last four months in final product stocks. Employment and purchasing operations gained speed as the result of the increase in the production requirements. An expansion with a higher rate compared to the previous month was recorded in both indicators. Covid-19 pandemic continued to affect supply chain in a negative way in July because of the continuing restrictions in transportation. Besides, increase in the input demand affected the maintenance of increase in the delivery durations in a visible way. Input prices continued to increase significantly; however, this increase was recorded in a lower rate compared to the previous month. On the other hand, the recovery in the demand enabled increase in input costs to be reflected to the customers. In this way, final product prices inflation realized in the highest rate since March.
Andrew Harker, Economy Director of IHS Markit who evaluated the Istanbul Chamber of Industry Turkish Manufacturing PMI Data expressed that:
“PMI data of the beginning of the second half of the year provided an optimistic perspective that the recovery got strength after the restrictions taken because of Covid-19. Upon the normalization of operation conditions gradually, strong increases were observed in production and new orders and signals occurred that capacity pressures were experienced in the sector. This growth will help compensate some part of the production loss experienced in the previous recession period. However, this growth should be maintained for a longer time period in order to set the full recovery.
Refreshment in the sector continued
According to the July data of Istanbul Chamber of Industry Turkish Sectoral PMI, refreshment maintained its existence in manufacturing industry sectors and a strong recovery was experienced in the operational conditions of many sub-sectors. , a particular separation was observed in tendencies of several sectors since they continued to have difficulty because of coronavirus. Eight of ten sectors followed recorded a production increase in July. The number of sectors that recorded increase in the production reached to the highest level since the beginning of the recovery after Covid-19. While the strongest expansion was experienced in chemistry, plastics and rubber products sector, production demonstrated a significant increase in the sectors such as non-metallic mineral products, main metals, machinery and metal products, wood and paper products, etc.
Also, some sectors continued to have difficulty. In sectors that recorded a strong growth in the production, increase in the new orders played an important role. New orders, mostly strong, recorded increase in seven of ten sectors. On the other hand, Covid-19 pandemic continued to affect new orders received from abroad and new export orders of only the half of the sectors increased. Increase in employment was recorded in nine of ten sectors followed. The only exception of this tendency was wood and paper products sector. This strong employment increase realized in electrical and electronic devices sector as well. Increase in input prices was recorded in a lower rate compared to June in six of ten sectors.
Andrew Harker, Economy Director of IHS Markit who evaluated the results of July survey stated that:
“July PMI data pointed out that the Turkish manufacturing industry is in the recovery process in terms of many branches of it. Gradual normalization of the conditions and firms that increased their operations enabled some sectors to record strong growth rates in their production and new orders. Increase in the production requirements turned out to be a positive development for employees and nine of ten sectors followed increased their employment rate in July. Despite of the generally positive tale, all of the sectors could enter to the growth rate. Such tendencies pointing out that while some sectors fell behind, others recorded improvement create concerns for increasing “double fast” recovery risk. However, when it comes to the whole picture, it is a positive table. Development tempo in many sectors points out to a faster recovery which was feared in the first phases of the period when Covid-19 crises affected the economy.”