Manufacturing PMI falls to seven-month low of 48.9 in April
April's PMIT survey data from Istanbul Chamber of Industry and Markit pointed to another deterioration in prevailing business conditions in the Turkish goods-producing sector. Central to the latest downturn was a fall in new orders received, which resulted in another drop in output. Purchasing activity was unchanged from March as manufacturers allowed their input stocks to shrink further, and backlogs of work continued to be depleted. More positively, manufacturing employment rose, having registered almost no change one month previously. Input price inflation slowed to the weakest in 2016 so far, and was well below the long-run survey average. Output price inflation also remained relatively muted.
The headline Istanbul Chamber of Industry Turkey Manufacturing PMI is a composite single-figure indicator of manufacturing performance. It is derived from indicators for new orders, output, employment, suppliers' delivery times and stocks of purchases. Any figure greater than 50.0 indicates overall improvement of the sector.
The PMI remained below the no-change mark of 50.0 for the second month running in April, signalling an ongoing deterioration in manufacturing business conditions at the start of the second quarter of 2016. Moreover, the headline figure fell from 49.2 to 48.9, signalling the strongest rate of decline since last September. The PMI was negatively influenced by four of its five components in April, the exception being employment.
Turkish manufacturing new orders declined for the second month running in April, following a four-month sequence of growth. The rate of decline in the latest period was broadly in line the trend shown over the previous downturn which lasted from January to October last year. Weak international demand contributed to the overall decline, with new export business falling for the fourth consecutive month.
Production also contracted for the second month in a row, and at the fastest rate since last September. Despite the lower level of output, backlogs of work continued to decline, signalling a lack of pressure on manufacturing capacity. Reflecting this, purchasing activity was unchanged since March as firms allowed inventories of inputs to decline.
Employment rose slightly in April, having been almost unchanged in March. Recruitment was linked by a number of firms to new projects.
Survey data indicated a further dwindling of inflationary pressure in April with average input prices rising at the slowest rate in 2016 so far, and one that was well below the long-run survey trend. Similarly, prices charged for manufactured goods rose at a modest pace.