Turkey: Manufacturing boosted in December, record import cost increase

Turkish factory activity boosted in December as companies recruited more workers, despite a slowdown in production and new orders amid sharp fluctuations in the Turkish lira over the past month.

In particular, manufacturing PMI rose to 52.1 points in December from 52.0 the previous month, according to data from the Istanbul Chamber of Industry and IHS Markit, remaining comfortably above the 50-point mark for growth.

The rate of job creation was the highest since August.

The devaluation of the pound has raised import costs to the highest level since 2005 when the relevant measurements began, while manufacturing companies have increased producer prices to respond to rising costs.

New orders slowed for a third straight month despite rising exports, while production fell after a small increase in November.

“Rising costs created problems for the Turkish manufacturing sector in December. Record increases in import costs and selling prices prevented customers from committing to new orders,” said Andrew Harker, chief financial officer of IHS Markit.

“Along with the potential problems caused by the Omicron mutation, the sector will start in 2022 from a difficult position,” he added.