ISME PMI Rises to 48.3, Indicating the Mildest Deterioration in Business Conditions Since May
The Istanbul Chamber of Industry (ISO) announced the results of the Turkey Manufacturing PMI (Purchasing Managers' Index) survey for November 2024, considered the fastest and most reliable reference for manufacturing performance, which is a leading indicator of economic growth. According to the survey results, all figures measured above the threshold value of 50.0 indicate an improvement in the sector. Although the headline PMI remained below the threshold of 50.0 for the eighth consecutive month, it rose from 45.8 in October to 48.3 in November, indicating that the deterioration in operating conditions was the mildest since May.
The increase in the headline index in mid-quarter was attributed to signs of limited recovery in demand. While firms continued to struggle with new orders, both total new orders and new export orders showed a more moderate decline compared to October. Similarly, the contraction in production significantly slowed down in November, recording the lowest rate since April.
The revival of employment after nine months of contraction was the most positive development in the November survey. Although the increase in employee numbers was limited, it was measured at the highest rate since July 2023. The manufacturing sector also received some support from decreasing inflationary pressures. Input cost inflation fell for the fourth consecutive month, reaching its lowest level in two years. Survey participants reporting an increase in input prices attributed this situation to rising raw material costs and the weakness of the lira. The rate of increase in firms' final product prices also slowed, occurring at the lowest rate in nearly five years. Although the decline in input purchases and input stocks continued, this decrease occurred at a lower rate compared to October. On the other hand, a sharp drop in final product stocks was recorded, the steepest since December 2021. Participating firms noted that supplier delivery times have lengthened for the second consecutive month on a monthly basis, partly due to geopolitical tensions.
Andrew Harker, Economics Director at S&P Global Market Intelligence, commented on the Istanbul Chamber of Industry Turkey Manufacturing PMI survey data, stating, "In November, significant signs of improvement emerged in Turkey's manufacturing PMI data. The slowdown in production and new orders was much more limited compared to October. Looking at the historical relationship between PMI and official production figures, the recent numbers appear to align with increases in manufacturing output. The resumption of employment growth was noted as the most positive development in the survey. This suggests that firms expect an increase in workload and the need for additional personnel in the coming months. The easing of inflationary pressures also contributed to the improvement observed in November. The lowest increase in final product prices in the last five years encouraged some customers to place new orders. We hope that the current trend in inflation will continue in the coming months, supporting further improvements in demand conditions."
According to sectoral PMI, new orders slowed in nine sectors excluding food. The Istanbul Chamber of Industry Turkey Sectoral PMI report for November indicated that while challenging operating conditions persisted in most sectors, some signs of improvement in demand were observed. The easing of inflationary pressures provided some support to firms. In all sectors, the increase in input costs lost momentum.
As in October, new orders slowed in nine of the ten sectors tracked in November. The exception to this trend was again in food products, where the new business volume increased strongly, recording the fastest improvement since March. In other sectors, although new orders slowed, declines generally slowed compared to the previous month. The only sector where the slowdown became more pronounced compared to October was textiles.
A similar picture emerged in new export orders, which showed that declines had generally lost momentum. The chemicals, plastics, and rubber products sector increased its new orders from abroad after a seven-month trend of slowdown. As in overall new orders in November, the only sector that observed growth in production was food products.
On the other hand, declines in the tracked sectors were more moderate than in October. Easing cost pressures provided support to manufacturers in November. Input price inflation decreased across all sectors. The slowest increase was seen in chemicals, plastics, and rubber products, while non-metallic mineral products recorded the lowest inflation since the survey began in January 2016. The highest increase in input costs occurred in food products, which also saw the fastest rise in final product prices in November. The sectors of non-metallic mineral products and textiles reduced their selling prices, with textiles experiencing a decline for the first time in over a year.
The increase in the number of sectors raising their employee counts from two to three indicated some signs of improvement on the employment front compared to October. The fastest expansion in employment occurred in land and maritime vehicles, but the strong rise in this sector partially offset the record drop experienced in the previous month. Similarly, purchasing activities increased in three sectors, but the rise in input stocks was limited to just one sector. This situation also applied to final product stocks, where only food products saw an increase compared to the previous month.