The Istanbul Chamber of Industry Turkiye Manufacturing Purchasing Managers' Index (PMI) increased to 49.1 in December, up from 48.3 in November, indicating a slight moderation in the manufacturing sector's health, which was the mildest decline in eight months.

The Turkish manufacturing sector moved closer to stabilisation in December due to the slower declines observed in output, new orders, purchasing activity, and inventories. However, employment fell again after a rise in November. Input costs rose significantly, but output price inflation slowed to its weakest pace in more than five years, S&P Global said in a press release.

Production was scaled back only marginally and to the least extent in the current nine-month sequence of slower output, amid some signs of demand improving. New orders continued to moderate overall, however, as demand remained subdued.Although still solid, the latest easing of new business was the least marked since last April. Similarly, new export orders also moderated to a lesser extent at the end of the year. With new order inflows remaining muted, manufacturers scaled back their purchasing activity, inventory holdings and employment, the last of which easing following a rise in November. In all cases, however, rates of slowdown were only marginal, the release added.

Input costs increased at a marked pace in December, linked to higher raw material prices and weakness of the lira against the US dollar. The pace of inflation was a three-month high but much weaker than the average for 2024. Meanwhile, the pace of output price inflation was only slight, having eased to the weakest in just over five years. While some firms increased charges in response to higher raw material costs, others offered discounts to customers as part of efforts to secure sales.

“The final set of PMI data for Turkiye in 2024 provided plenty of hope for the sector in 2025. While business conditions continued to moderate, the latest slowdown was only marginal as signs of improvement were seen in a range of variables across the survey. If this momentum can be built on at the start of 2025, we could see the sector return to growth,” said Andrew Harker, economics director at S&P Global Market Intelligence. “The prospects for the sector should be helped by a much more benign inflationary environment than has been the case in recent years. Output prices rose only slightly in December, and to the least extent in just over five years.”