Factory activity in Türkiye contracted for a third straight month in June mainly due to subdued demand and output that moderated, a survey showed on Monday.

The Purchasing Managers' Index (PMI) for Turkish manufacturing fell to 47.9 last month from 48.4 in May, according to a survey by the Istanbul Chamber of Industry (ISO) and S&P Global, dropping further below the 50-point level that marks growth in activity.

Muted demand conditions caused slowdowns in both new orders and production, the survey showed.

Lower workloads led manufacturers to scale back their workforce and purchasing activity in June, at sharper rates than the previous month. The survey showed the sharpest fall in workforce numbers since late-2022.

The rate of input cost inflation slowed and the pace at which firms raised their selling prices also softened in June, according to the survey.

Suppliers' delivery times lengthened due to transportation issues, particularly as a result of disruption in the Red Sea, the firms said.

"The sustained period of muted demand is starting to be more keenly felt in the manufacturing labor market, with Turkish firms showing a reluctance to replace departing staff and thus scaling back employment to the largest degree since October 2022," Andrew Harker, economics director at S&P Global Market Intelligence, said.

"Firms are benefiting from softer cost inflation, however, and were able to raise their output prices only modestly in June. This should hopefully help to provide support to demand in the months ahead."