Turkey’s manufacturing sector stagnated in May, a closely watched survey of sentiment showed on Friday, with a slight fall in new orders suggesting a weak outlook as subdued market conditions weigh on demand.
HSBC Manufacturing Purchasing Managers’ Index (PMI) fell to 50.2 in May from 52.3 in April, holding just above the 50 line that separates expansion from contraction. That signalled little change in operating conditions on the month.
May’s survey indicated that new order volumes were down slightly, falling for the third time in four months as market conditions remained subdued.
But new export orders rose to their strongest reading since January. The Middle East and the USA were noted as areas of demand growth.
“Overall, the May PMI survey indicates that the soft patch in production during the first quarter of this year may well extend into the second for two reasons: first, weakening capital inflows due to the ongoing Eurozone crisis and, second, tightening of monetary conditions at home.
While Turkey’s strong fundamentals argue for still positive growth and further job creation, the pace could be lower than originally envisaged,” said Murat Ulgen, HSBC’s chief economist for central & eastern Europe and sub-Saharan Africa.
The Turkish economy was one of the world’s best performers in 2011 with growth of 8.5 per cent. In 2012, the government expects growth to slow to 4 per cent.
While manufacturing output rose for the second month in a row in May, the rate of growth was only slight as the soft underlying trend in new work weighed on production, the survey showed. Turkey posted a lower-than-expected trade deficit in April, mainly on the back of a strong increase in gold exports and a sharp decline in imports, data showed on Thursday, pointing to a further improvement in the country’s huge current account gap.
Turkey’s trade deficit narrowed to $6.6 billion in April from $9.08 billion a year earlier, below a forecast deficit of $7.3 billion in a Reuters poll, the Turkish Statistics Institute said. Exports rose 7 per cent to $12.68 billion and imports fell 8 per cent to $19.27 billion in April.
“The lower-than-expected deficit was mainly on the back of strong export figures driven by gold exports,” wrote analysts at TEB.
Total gold exports rose to $1.27 billion and 23.9 tonnes, from $75.4 million and 1.65 ton last year. Some 95 per cent of the total gold exports went to Iran in April.
“April’s foreign trade data does not change Turkey’s high external deficit story, but shows that households started to resort to their gold savings, as they generally do during times of stress,” the TEB analysts added.
From / Gulf Today