Turkey Manufacturing Sector Contraction Deepens

The Istanbul Chamber of Industry Türkiye Manufacturing PMI fell to 47.9 in September 2026 from 48.1 in the previous month. This marked the thirtieth consecutive month in contraction territory, as new orders eased and demand remained subdued amid uncertainty stemming from the conflict in the Middle East. In response, manufacturers reduced output for a fourth straight month. Firms also cut employment, purchasing activity, and inventories as they adjusted operations to weaker demand conditions and softer inflows of new business. On the pricing front, input cost inflation accelerated to a four-month high, driven by higher fuel, energy, and transportation expenses linked to the Middle East conflict, alongside rising raw material prices. Manufacturers subsequently raised selling prices at a faster pace as increased costs were passed on to customers.

The Istanbul Chamber of Industry Türkiye Manufacturing PMI ticked up to 48.1 in August 2026 from 47.7 in July, reaching its highest level in three months. The reading signalled a modest easing in the deterioration of business conditions, although the Middle East conflict continued to weigh on the sector, keeping demand muted amid uncertainty. Both total new orders and new export business declined, albeit at slower rates than in July. In turn, manufacturers scaled back production for the third consecutive month, although the pace of contraction was modest. Firms also reduced employment and purchasing activity, with both falling at solid rates that were sharper than in July. Stocks of both purchases and finished goods also dropped further. Input cost inflation accelerated to a three-month high, driven by higher fuel and oil costs as well as rising raw material prices. This prompted firms to raise their selling prices. Moreover, suppliers' delivery times lengthened.

The Istanbul Chamber of Industry Türkiye Manufacturing PMI rose to 47.7 in July from 47.1 in June, but remained below the 50.0 threshold and signaled a deterioration in manufacturing conditions for the 28th consecutive month. New orders declined further amid subdued market conditions and price pressures, while international demand also weakened due to the war in the Middle East. Output contracted for a second straight month, prompting firms to reduce employment, purchasing activity, and inventories. Meanwhile, supplier delivery times lengthened at the slowest pace in nine months as softer input demand eased supply chain pressures, although delays in sea transportation persisted. On prices, input cost inflation slowed for the third consecutive month to its weakest since November 2025 despite higher oil and raw material costs, while selling price inflation eased to its lowest level of 2026 so far.