Turkey’s headline manufacturing PMI ticked up to 47.4 in December from 47.2 in November, but continued to point to a moderation of business conditions in the manufacturing sector as 2023 drew to a close, S&P Global said on January 2.

The latest slowdown recorded by the Istanbul Chamber of Industry Türkiye Manufacturing Purchasing Managers’ Index extended the period of softening operating conditions to six months, contrasting with a sequence of improvement seen in the opening half of last year, it added. Any PMI figure below 50.0 denotes a contraction.

Commenting on survey data, Andrew Harker, economics director at S&P Global Market Intelligence, said: "The moderation in the Turkish manufacturing sector seen at the end of 2023 summed up a challenging second half of the year for firms, with subdued demand a key feature. There was some good news for the labour market, however, with firms keen to keep workforce numbers stable heading into the new year.

"There were also further signs of cost pressures easing, and although that didn't translate into softer rises in selling prices in December, the potential for a more subdued inflationary environment in 2024 could provid some hope for a demand recovery in the sector."

Nicholas Farr at Capital Economics noted that the survey showed the Turkish manufacturing new orders index remained at the depressed level of 45.3, despite a small increase, implying that aggressive policy tightening by the central bank was continuing to weigh on demand.

Market conditions for Turkish manufacturers were challenging both domestically and abroad, S&P said.

Purchasing activity was scaled back by the largest extent in four months. “As a result,” S&P said, “stocks of inputs also moderated. Weak demand for inputs helped suppliers to speed up their deliveries, ending an 11-month sequence of lengthening lead times. Currency weakness, higher wages and increased raw material prices meant that input costs rose again in December, but the rate of inflation eased for the fifth month running.” 

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