Turkey’s manufacturing expands in June, cost pressures build: report – Turkish Minute

Turkish factory activity expanded at a steady pace in June, although new orders growth slowed and price pressures grew as the currency weakened, Reuters reported on Monday, citing a survey.

The Purchasing Managers’ Index (PMI) for manufacturing came in at 51.5 in June, unchanged from the previous two months, staying above the 50-point line that separates expansion from contraction, the Istanbul Chamber of Industry and S&P Global said.

Output was up for the fourth month running, the survey showed, with the rate of growth the fastest since July 2021. Along with improving demand, firms also attributed the rise to the ongoing recovery from February’s two major earthquakes and a pickup in activity following Turkish elections.

“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,” said Andrew Harker, economics director at S&P Global Market Intelligence.

“Firms were battling the familiar foe of currency weakness, however, which limited new order growth and brought an abrupt halt to the recent easing of inflationary pressures,” he added.

The Turkish lira has fallen 28 percent so far this year, largely after the re-election in late May of President Recep Tayyip Erdoğan, who has moved to backtrack on years of unorthodox economic policy. As part of the policy pivot, the central bank has stopped using its reserves to support the lira.

The survey showed input cost inflation for factories accelerated sharply in June and was the most pronounced since July last year, with respondents citing unfavorable exchange rate movements as the main cause.