May 2023 Report of ICI Türkiye Manufacturing PMI and Turkey Sector PMI Released

• 01.06.2023
• News

The headline PMI of the Istanbul Chamber of Industry (ICI) Türkiye Manufacturing PMI survey, which is the fastest and reliable reference accepted in manufacturing industry performance of the economic growth, was unchanged from the previous month at 51.5 in May of 2023. This marks the fifth consecutive month over the 50.0 no-change mark to signal a further improvement in business conditions in the manufacturing sector. The modest strengthening in the health of the sector was the joint-largest since the end of 2021.

According to the report of Istanbul Chamber of Industry Türkiye Sector PMI, eight out of 10 monitored sectors increased their output. The fastest increase was in land and sea vehicles sector. The highest increase in new orders was in textile products while only the wood and paper products sector saw a decrease. Most of the sectors increased their staffing levels. The electrical and electronic products sector recorded the highest and the biggest increase in employment since January 2016, the month the survey started. The input costs continued to increase in general, but the inflation dropped in most of the sectors compared to last month.

Istanbul Chamber of Industry (ICI) released its May 2023 Türkiye Manufacturing PMI (Purchasing Managers’ Index) survey, which is the fastest and reliable reference accepted in manufacturing industry performance of the economic growth. According to the results of the survey where any figure greater than 50.0 indicates overall improvement of the sector, the headline PMI was unchanged from the previous month at 51.5 in May. This marks the fifth consecutive month over the 50.0 no-change mark to signal a further improvement in business conditions in the manufacturing sector. The modest strengthening in the health of the sector was the joint-largest since the end of 2021. 

There were widespread reports of demand improvements within the latest survey. The most direct impact of this was on new orders, which increased solidly and for the third month running. New export orders were also up. In turn, manufacturers increased their production volumes, also for the third successive month. Some respondents indicated that they were just resuming operations following February's earthquake. Manufacturers were able to successfully increase their staffing levels for the first time in three months in response to higher new orders. There were still some reports, however, of early retirements limiting workforce numbers. Higher staffing levels meant that firms were able to keep on top of workloads and reduce backlogs following an increase in the previous survey period. Also contributing to efforts to meet demand were a rise in purchasing activity and the use of inventories of both inputs and finished goods. 

May pointed to a further easing of inflationary pressures in the sector. Although input costs continued to rise, often reflecting currency weakness, the rate of inflation eased to the weakest in the year-to-date. In turn, the pace of increase in selling prices softened for the fourth month in a row and was the weakest since April 2020. 

Commenting on the Istanbul Chamber of Industry Turkey Manufacturing PMI survey data, Andrew Harker, Economics Director at S&P Global Market Intelligence, said: 

"The gradual recovery of the Turkish manufacturing sector, both from February's earthquake and the lingering disruption caused by the COVID-19 pandemic, remained on track in May. Helping firms respond to greater new business volumes was a renewed increase in employment as firms were able to make progress on building up workforce numbers. There was more respite on the price front, with inflationary pressures moderating and remaining much less pronounced than has generally been the case since the pandemic. This relatively benign environment should help to sustain the recovery in the months ahead.”

Output increased in eight of the 10 monitored sectors

According to the May 2023 Istanbul Chamber of Industry Türkiye Manufacturing PMI report, the manufacturing sector broadly improved in operating conditions. Output increased in eight out of the 10 monitored sectors, except for wood and paper products and electrical and electronic products sectors. Land and sea vehicles sector recorded the fastest increase, while the food products, non-metallic mineral products and clothing and leather products sectors returned to the growth zone. 

There was a better outlook in new orders with only decrease in wood and paper products sector. The fastest increase was in textile products which was closely followed by the land and sea vehicles sector. Total new orders were supported by fast growth in new export orders in some sectors, particularly the machinery and metal products, land and sea vehicles and food products. 

With the increase in new orders in general, most of the sectors increased their staffing levels in May. The electrical and electronic products sector recorded the highest and the biggest increase in employment since January 2016, the month the survey started. Staff numbers only decreased in non-metallic mineral products and textile sectors. Despite the growth in new orders, the increase in staff numbers helped the firms to manage their workloads. The backlogs in the mid second quarter increased in only four of the 10 sectors. 

The input costs continued to increase in general, but the inflation dropped in most of the sectors compared to last month. The fastest increase was in land and sea vehicles, while the slowest increase was in chemical, plastic and rubber products sector. This trend was also seen in finished goods prices. The slowdown in the production of the electrical and electronic products sector led the firms to use their existing stocks to meet their new orders. In turn, finished goods stocks decreased rapidly in May. However, in general, in most of the sectors, stocks increased after production in May. The same happened in input stocks, too where, increase was seen in 6 out of the 10 monitored sectors. 

You can find attached the Istanbul Chamber of Industry Türkiye Manufacturing PMI and Sector PMI May 2023 reports.