Factory activity in Türkiye continued its expansion in March, a closely watched survey showed Monday, with improvements in new orders and output. However, February’s massive earthquakes continued to impact the sector.
The Purchasing Managers’ Index (PMI) for manufacturing rose to 50.9 last month from 50.1 in February, staying above the 50-point threshold that separates expansion from contraction, the Istanbul Chamber of Industry (ISO) and S&P Global said.
Manufacturing production increased, the panel said, adding that in some cases, earthquake reconstruction efforts led to higher output.
"Although February’s earthquake continued to impact the sector, a reduced level of disruption and reconstruction efforts contributed to improvements in new orders and output," it noted.
The survey showed that new orders returned to growth for the first time in a year and a half, as business increased solidly over the month and export orders picked up the pace.
Despite the increase in production requirements, employment dipped for the first time in five months, partly due to the earthquake but also due to the new early retirement law, the panel said.
Türkiye’s economy must now absorb the consequences of the catastrophe, which, according to the World Bank, caused an estimated $34.2 billion (TL 656.75 billion) in direct physical damages – the equivalent of 4% of Türkiye’s 2021 gross domestic product (GDP).
President Recep Tayyip Erdoğan put the cost of the damage at $104 billion.
Input costs and output prices rose sharply last month amid higher raw material costs, currency weakness and increased wages, the panel noted.
"Renewed output growth in the Turkish manufacturing sector was a welcome development in March following the marked impact of the earthquake in February," said Andrew Harker, economics director at S&P Global Market Intelligence.
"Although some firms were still affected, the start of reconstruction efforts supported the overall return to growth. With new orders also up, we are hopefully seeing an end to the relatively soft conditions experienced by firms over the past year or so."