Turkish manufacturing grew strongly in October even after the lira fell to record lows against the dollar, according to IHS Markit and the Istanbul Chamber of Industry (ISO).
The purchasing managers’ index (PMI) for Turkey, a key gauge for the health of the manufacturing sector, climbed to 53.9 last month from 52.8 in September, the fifth-straight month of improvement. Any reading above 50 indicates expansion.
Customer demand continued to recover and production was supported by the fastest rise in employment since February 2018, IHS Markit and ISO said in a monthly report on Monday.
Some investors and economists are predicting a sharp slowdown in economic activity in Turkey after the lira slumped over the past few months and inflation remained at around 12 percent.
Turkish industrial production is expected to fall by just 0.8 percent in 2020 despite currency weakness, inflationary pressures, and the collapse in output earlier in the year caused by COVID-19, said Andrew Harker, an economics director at IHS Markit.
“The recovery in the Turkish manufacturing sector remained on track in October, with a further solid increase in production,” Harker said. “Moreover, firms continued to ramp up staffing levels to support output, suggesting confidence that the recovery is sustainable.”
Weakness in the lira – the currency had slumped to successive record lows in October – meant input costs rose at the fastest pace in two years, while output prices posted the largest increase in 25 months, IHS Markit said.
The Turkish lira has slid to successive all-time lows against the dollar this year. It dropped 0.7 percent to a record 8.4103 per dollar on Monday, taking losses this year to 29 percent.