Turkey’s manufacturing activity grew in March as new orders began to improve, a closely-watched survey showed Thursday, while growth in output and employment continued in the manufacturing sector.

The headline Purchasing Managers’ Index (PMI) for the manufacturing sector rose to 52.6 in March from 51.7 a month earlier, data from the Istanbul Chamber of Industry (ISO) and IHS Markit showed, hovering above the threshold level of 50 that denotes growth for the tenth month in a row.

The reading signaled a solid improvement in the health of the sector with the backing of a rise in new orders, the report said.

Higher new orders and the addition of new production lines supported an increase in output, the panel noted, although raw material supply shortages prevented a stronger pace of increase.

"Panelists reported signs of improving demand, while new export orders rose for the third month running and at a faster pace than total new business," the report said.

Suppliers’ delivery times lengthened, and supply shortages added to inflationary pressures as well as weakness in the Turkish lira at the end of the first quarter, the panel added.

The sharp acceleration in input and output price inflation was mainly due to raw material issues and exchange rate fluctuations, it said.

Firms continued to hire more staff with investment, new production lines and higher output requirements all mentioned as factors supporting job creation, it added.

"The Turkish manufacturing sector managed to secure renewed increases in new orders and expand both output and employment again in March, despite facing some substantial headwinds," said Andrew Harker, economics director at IHS Markit.

"Firms will be hoping that some of these headwinds start to ease in the months to come so that growth in the sector can start to build momentum."