According to the data announced by the Istanbul Chamber of Industry (ISO) and IHS Markit; Manufacturing PMI increased from 50.8 to 54.4 in January. The manufacturing PMI index, which was 33.4 in April due to the economic recession caused by Covid-19, recovered in the following months and had a growth position as of June. After the October period, both the limiting effect of increasing interest rates on domestic demand and the tighter Covid restrictions towards the end of the year caused the sector to slow down, although it remained in the growth zone. In January, although the risk created by these negative factors continued, increased orders and production with vaccine optimism led to an acceleration gain in the index.
If we look at the details of the PMI data; production and new orders returned to the growth zone. After the slowing effects of the second wave of the coronavirus epidemic, acceleration was seen again in January. Global expectations for vaccination positively affected the trend in new orders. New orders moved into growth zone, and new export orders were positively affected. Employment showed the best increase of more than 3 years, as the acceleration in new orders and production increased the need for personnel. On the other hand, the continuation of the disruption caused by Covid-19 in the supply chains continued the upward pressure on the input costs side, while the inflationary price pressures in the sector were alleviated with the stabilization of TRY and the decrease in exchange rates.
With the January PMI data, it is seen that the year has made a rapid start. It can be evaluated positively in terms of growth projections, because 1Q21 is seen as the most risky period due to the ongoing conditions and restrictions of the Covid outbreak. The continuation of the rapid trend in production will positively affect the overall growth outlook. On the other hand, the slowing effect of factors such as tightening financial conditions and epidemic restrictions on the economy will be closely monitored. These factors still pose downside risks. As global economies, the extent of the epidemic conditions will improve and how effective the vaccination will determine the acceleration of Turkey's economy.
