According to the data announced by the Istanbul Chamber of Industry (ISO) and S&P Global; Manufacturing PMI fell to 49.4 from 50.4 in March. The latest data reveal the slowdown in production and new orders due to factors such as the fragility of demand, price increases and the war in Ukraine. While the increase in export demand and employment continues, albeit at a slower pace, supply chain problems along with inflationary pressures also suppress the sector's activity. The PMI has dropped to its lowest level since May 2021 and below the 50 threshold.
If we look at the details of the PMI data; While the war in Ukraine was one of the factors that suppressed customer demand, price increases deterred buyers and negatively affected production. While the war in Ukraine was effective in the decrease in total new orders, new orders from abroad lost momentum and continued to increase. Difficulties in procurement of materials, war in Ukraine and price increases have been effective in extending supplier delivery times. Employment growth also slowed in March, registering at the lowest rate of the 22-month expansion period. Firms' purchasing activities showed the fastest decline since May 2020 due to new orders and reduction in production requirements.
The depreciation of the Turkish lira and the war in Ukraine were effective in the increase in raw material prices. Input costs inflation slumped to a five-month low, but remained high. On the other hand, with the reflection of the increase in input costs to customers, final product price inflation accelerated and reached one of the highest levels in the survey history.
The reflections of the Russia-Ukraine war, especially as an important externality of foreign demand, show that it will have negative effects on exports and global economic activity in the coming period. We think that the contribution of exports to growth will decrease in an environment where foreign orders are negatively affected by the current conjuncture. On the other hand, with the war making the disruption in supply chains more evident, inflationary pressures increase and the transition effect to final goods inflation over costs accelerates. We think that we will see the effects of this situation on growth and inflation balances as of the first quarter.
Kaynak Tera Yatırım
Hibya Haber Ajansı
