Factory activity in Turkey expanded in December as firms hired more staff to enlarge their capacity despite a slowdown in actual output and new orders amid lira swings, a survey showed on Monday.

The Purchasing Managers’ Index (PMI) for manufacturing ticked up to 52.1 in December from 52 a month earlier, data from the Istanbul Chamber of Industry (ISO) and IHS Markit showed.

The headline reading held comfortably above the 50 mark that denotes growth. The health of the sector has now strengthened in each of the past seven months, the panel said.

Continued job creation was one of the factors behind the latest improvement in business conditions. Employment rose for the 19th successive month, and at a solid pace that was the fastest since August.

Rising staffing levels are often linked to efforts to expand capacity.

Lira depreciation pushed input costs up at the fastest rate on survey records going back to 2005, the panel said, and in turn, manufacturers raised output prices, deterring customers.

Total new orders moderated for the third month running despite an expansion in export orders, the survey showed, while production slowed following a slight rise the previous month due to price pressures.

Widespread difficulties in sourcing inputs caused longer supplier delivery times, while volatility in exchange rates and transportation issues exacerbated these problems.

"Cost pressures hampered operations across the Turkish manufacturing sector in December. Record rises in input costs and selling prices deterred customers from committing to new orders," said Andrew Harker, economics director at IHS Markit.

"Alongside the potential issues caused by the emergence of the omicron variant of the COVID-19 pandemic, the sector begins 2022 in a challenging position."