Signs of a slowdown in Turkish manufacturing caused by supply chain difficulties limiting demand and production are seen in the October data of the Istanbul Chamber of Industry Turkey Manufacturing purchasing managers’ index (PMI), IHS Markit said on November 1.
The headline PMI reading remained above the 50.0 no-change mark for a fifth consecutive month in October, but dropped to 51.2 from 52.5 in September.
Commenting on the survey data, Andrew Harker, economics director at IHS Markit, said: “The supply constraints that we have noted in recent months have really started to bite now and are actively limiting volumes of output and new orders in the Turkish manufacturing sector, with key items such as electronic components often unavailable.
“Where firms can source items, they are having to pay increasingly high prices, with inflationary pressures added to by currency weakness. The fourth quarter therefore looks to be one filled with headwinds for firms, although one positive from the latest PMI survey was that new export orders continued to rise.”
Raw material supply shortages added to inflationary pressures in Turkish manufacturing, while the sector last month saw output and new orders moderate, said IHS Markit.
IHS Markit added: “Production was scaled back for the first time in five months, with difficulties securing inputs and unfavourable currency fluctuations constraining output. These factors also led new business to slow, albeit marginally. A lack of electronic components was mentioned in particular has having held back new orders.
“In contrast to the picture for total new business, new export orders continued to expand, and at a solid pace. Supply-chain delays remained widespread in October, with delivery times lengthening to a greater extent than in September. Suppliers themselves reportedly had difficulties sourcing materials, while transportation problems and issues importing goods also contributed to longer lead times.”
As well as restricting demand and production volumes, supply shortages also caused price rises, IHS Markit also noted, saying: “Input costs increased sharply, and at the fastest pace in three months. Currency weakness was also a key factor in the latest rise in input prices.
“In turn, firms increased their own selling prices, with the rate of inflation accelerating to the steepest since September 2018. Efforts to guard against further price rises and a lack of material supply led to a third successive monthly increase in stocks of purchases. The rate of accumulation was only slightly softer than the 45-month high posted in September.”