Türkiye's factory activity ekes out growth, global recovery still fragile

Türkiye
# 02 February 2023 03:32 (UTC +04:00)

The factory activity in Türkiye expanded very slightly in January after shrinking for 10 straight months, while activity across Europe and Asia contracted again, surveys showed Wednesday, underscoring the fragility of the global economic recovery, APA reports citing Daily Sabah.

Still, both output and new orders continued to contract in Türkiye, while data showed factories in the eurozone at least may have passed the trough.

Türkiye’s Purchasing Managers' Index (PMI) for manufacturing rose to 50.1 last month from 48.1 in December, inching above the 50-point line that separates expansion from contraction, the Istanbul Chamber of Industry (ISO) and S&P Global said.

Some firms contributing to the survey pointed to some improvement in demand, although it remained fragile amid price rises, while output and new orders both shrank at a much slower rate than in December.

The panel showed that employment increased for the third month running, enabling firms to reduce backlogs of work, the panel showed.

Input cost inflation rose sharply in January primarily due to a rise in the minimum wage, the survey showed, with higher material costs and currency weakness also putting a burden on manufacturers.

In turn, firms increased their prices, with the rate of output price inflation accelerating to a seven-month high.

"Business conditions were stable in January, while the upward trajectories of the output and new orders indices amid signs of demand improving provide hope that expansions can be recorded in the coming months," said Andrew Harker, economics director at S&P Global Market Intelligence.

"While input cost and output price inflation did pick up due to the rise in the minimum wage, they remained some way below the highest points seen in 2021 and 2022."

Price pressures slackened, and the fall in demand moderated in the eurozone, driving a surge in optimism. The bloc eked out growth in the final three months of 2022, managing to avoid a recession, official data showed on Tuesday.

S&P Global's final manufacturing PMI climbed to a five-month high of 48.8 in January from December's 47.8, in line with a preliminary reading but still below the 50 mark.

"We think in, general, the worst is now past for both inflation and the activity front. The activity is not softening; it is going back up, so expectations are for a rebound," said Mateusz Urban, Senior Economist at Oxford Economics.

Manufacturers in Germany, Europe's largest economy, started 2023 with a slightly brighter outlook for the year ahead despite demand continuing to fall as inflation and supply chain problems eased.

In France, the bloc's second-biggest economy, factory activity returned to growth, albeit not as strongly as initially forecast.

But British manufacturing business shrank for a sixth month in January, kicking off a tough 2023 when the country's economy looks to fall into a recession.

Easing price pressures will, however, be welcomed by central bank policymakers. Soaring inflation – initially described as transient – has proved far more sticky than thought and prompted aggressive monetary tightening.

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