Turkish factory activity dipped slightly in July after growing for six straight months as expansion in new orders and output came to an end due to inflationary pressures, Reuters reported.
The Purchasing Managers’ Index (PMI) for Turkish manufacturing fell to 49.9 last month from 51.5 in June, the Istanbul Chamber of Industry and S&P Global said, slipping just below the 50-point line that separates expansion from contraction.
Firms largely attributed the slowdown to inflationary pressures, the survey panel said, as the Turkish lira hit a series of record lows against hard currencies after May elections.
More than half of the survey respondents said their input prices rose due to currency weakness while higher wages added to overall manufacturing cost, and, in turn, output prices also increased, the panel said.
The price rises also weighed on demand, the survey showed, leading to the first slowdown in new orders in five months. However, employment increased in July as firms attempted to expand capacity.
“Resurgent price pressures dampened demand for Turkish manufactured goods in July. Both input costs and selling prices rose at much stronger rates at the start of the third quarter, making it harder for firms to secure new business,” Andrew Harker, economics director at S&P Global Market Intelligence, was quoted by Reuters as saying.
“As a result, a four-month sequence of production growth came to an end. Manufacturers will be hoping that inflation starts to level off again to aid in the pursuit of new business.”