According to the data announced by the Istanbul Chamber of Industry (ISO) and IHS Markit; Manufacturing PMI rose to 52 from 51.2 in November. Despite the signs that inflationary pressures and disruptions in supply chains affected demand negatively, growth in the sector gained momentum in November. On the other hand, it is obvious that the growth in the industry is accompanied by inflationary price changes as a reflection of the depreciation of the lira. Because, significantly increasing input costs and the reflection of the PPI, the sales prices are affected by the reflection on the CPI. PMI has been in growth zone above 50 basis points since June 2020, excluding May 2021 (closing effect).


If we look at the details of the PMI data; production and employment increased. While the improvement in operating conditions and existing orders are factors on production growth, the bilateral interaction between employment growth and production increase continues. On the other hand; The slowdown in new orders indicates that the driving foreign demand has lost momentum. Because of this; Supply sources that may cause global production and demand slowdown can be seen. In particular, price increases, electronic parts deficiencies and problems in the automotive sector stand out as the main reasons for the slowdown. While the delivery times are getting longer due to supply problems and shipping times, it is seen that companies have increased their tendency to collect inputs from the market and increase their stocks at the point of keeping up with the orders, and adopt a prudent approach.


On the inflation side; Due to the rapid rise in input costs, the sharp increase in input and product prices causes record sales price increases. The rapid increase in the exchange rate pass-through in the prices of goods sold indicates that manufacturers are reflecting their cost underwriting in their prices. The impact of the recent depreciation of the lira contributes to the cost increase caused by the global supply problems, the difficulties in the supply of raw materials and the problems in transportation. In particular, the effect of exchange rate increases has been increasing its weight as the main reason for cost and price underwriting in the sector recently. Inflationary pressures may continue due to the potential for the increase in PPI to be reflected on the CPI in the upcoming period.


We've been seeing a decline in manufacturing in European PMIs for a while. There are signs of slowdown in the world economy, albeit slightly. With the effect of Covid variants, the current slowdown may increase a little more. This is important in this respect; A slowdown in foreign demand dynamics, which is the main source of our exports, may have a downward reflection on the domestic export and production outlook. The industry, which has difficulties in keeping up with the above-normal demand, may be a slowdown factor in the production momentum. Along with the slowdown in orders, we may see a slightly downward or partial slowdown trend in the PMI data in the coming months. PMI, which is at the point of stability in the 55-60 band in the world and in the 50-53 band in our country, indicates a path of 4-5% in industrial production and 3-4% in GDP growth in terms of 4Q21. We expect a GDP growth of 10.3% throughout the year.


At the point of export, of course, a strategy is in place in order to protect both foreign exchange income and foreign demand in terms of strategic positioning. At the same time, within the framework of the strategic management of companies, a different approach can be adopted, especially for the components of domestic and foreign demand, where it is difficult to maintain the same momentum. In this period, in an environment where it is difficult to meet the supply-side supply problem and supplying goods to the domestic market due to exchange rate increases, we expect more outward orientation in terms of profitability. On the other hand, as the exchange rate increases, prices rise and demand decreases due to the decrease in the purchasing power of the consumer who has to meet higher prices. The increase in the exchange rate in the price given abroad allows the foreigner to buy domestically produced goods cheaper for himself. We think that partial problems on the supply side, on the other hand, may cause simultaneous slowdowns in production and consumption, as they may cause changes in non-trend demand factors. In terms of domestic demand, we may observe a problem at the price level, because inflationary effects make pricing difficult.

Kaynak Tera Yatırım-Enver Erkan
Hibya Haber Ajansı