Turkish factory activity in May fell below the threshold for the first time in a year, a closely-watched survey showed Tuesday, as the manufacturing industry was impacted by the strict coronavirus lockdown that was in place for much of May.

The headline Purchasing Managers’ Index (PMI) dropped to 49.3 in May, down from 50.4 in April, data from the Istanbul Chamber of Industry (ISO) and IHS Markit showed.

The reading thus slipped below the 50 mark that separates expansion from contraction for the first time since May a year ago.

Turkey had lifted virtually all social restrictions in March but backtracked in April when daily COVID-19 cases soared above 60,000. It prompted the government to impose the strictest lockdown yet from the end of April to May 17.

Turkey further eased measures meant to curb coronavirus infections Monday, including partially lifting a weekend lockdown and allowing restaurants to open to a limited number of guests.

The restrictions in May and associated softening of client demand led to moderations in both output and new orders during the month.

Output and new orders slowed in the month, while the rate of job creation softened to a one-year low. There were further reports of difficulties securing raw materials, meanwhile, which contributed to sharper increases in input costs and selling prices.

New export orders also decreased, ending a four-month sequence of growth, according to the report.


Manufacturers continued to raise their workforce numbers midway through the second quarter, but hiring was also impacted by COVID-19 restrictions.

As a result, the rate of job creation eased to the weakest in the current 12-month sequence of rising employment

Supply-chain disruption was again a feature of the latest survey, as highlighted by a marked lengthening of vendor delivery times. Difficulties securing raw materials often led to increases in their prices.

Input costs rose sharply again in May, and at a slightly faster pace than in the previous month.

"It is of little surprise that the COVID-19 lockdown restrictions that were in place for much of May had a detrimental effect on the Turkish manufacturing sector over the course of the month," said Andrew Harker, economics director at IHS Markit.

Firms will be hoping that the lockdown had the desired effect in bringing infections under control and that a swift return to growth will be seen now that measures have started to ease, Harker noted.

"Less transitory seem to be the problems in supply chains, which remained widespread in May and contributed to strong inflationary pressures."