Turkiye's manufacturing sector experiences pronounced slowdown in May

The softening in the health of the sector was reflected in a range of variables from the survey in May. In particular, firms reported a solid moderation of new orders, with the pace of easing the most pronounced since January. The slowdown was often linked by panellists to challenging demand conditions, with some customers deterred by high prices. These factors also contributed to a softening of new export orders, the eleventh in as many months.

A moderation of new orders led manufacturers to scale back production for the second month running, and to the largest degree in 2024 so far. Some panellists also indicated that capacity limits had restricted their ability to expand output, as per S&P Global.

Staffing levels were reduced for the fourth consecutive month, as some firms indicated a reluctance to replace departing staff given lower workloads.

Purchasing activity and inventories of both inputs and finished goods were all scaled back in May, in each case following increases in April.

Inflationary pressures continued to wane in May. The rate of input cost inflation eased to a five-month low, while charges increased at the slowest pace for a year. Where prices rose, respondents often linked this to currency weakness and higher raw material costs.

Turkish manufacturing firms posted a moderation of output for the second month running in May, with the latest slowdown in production the most marked in 2024 so far. Respondents often linked softer output to demand weakness, but there were also some reports that capacity had been insufficient to expand production.

A moderation of new orders meant that manufacturers were often reluctant to replace departing staff members, leading to a scaling back of employment during May. The easing of workforce numbers was the most marked in three months, but only modest overall as the vast majority of respondents (87 per cent) kept employment unchanged.

Fibre2Fashion News Desk (DP)