ANALYSIS: What do the indices of production and industrial turnover say?

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Surprising increase in industry, turnover rates say slowdown

March 12, 2021

Growth continues to surprise with the strong trend in the manufacturing industry.

With continued strong momentum, industrial production also beat expectations in January. Calendar-adjusted industrial production increased 11.4% in January, indicating a performance well above the average market expectation of 8.3%. The unrefined industrial production (crude), for its part, showed an increase of 7.5% due to the decrease in the number of working days compared to the previous year.

With the calendar effect and the trend of monthly increase in the seasonally adjusted index that began in May with an increase of 1.0% in January, the post-epidemic recovery reached approximately 68% and the index increased approximately 9% above the levels prior to the epidemic (February). . Thus, the seasonally adjusted industrial production index has grown continuously during the last 9 months, achieving an unprecedented performance in history.

Activity in the tourism and retail services sectors retreated due to epidemic restrictions

It is seen that the restrictions due to the epidemic continued to negatively affect retail spending in January; The volume index for the retail sector increased slightly by 2.0% (1.6% in December and 12.2% in November), while non-food expenses decreased 0.6% year-on-year. On the other hand, due to the ongoing strong trend in wholesale and automotive sales, there is a real annual increase of 15.8% in the retail and wholesale turnover index, but it can be said that this indicates a slight weakening in compared to the 21% increase between July and November.


In the turnover index of the other service sectors (non-commercial), despite the strong momentum of the information technology sector, a real annual decrease of 5.9% is observed due to the ongoing problems in the sectors related to tourism (hotel-restaurants, travel agencies and air transport). The IT sector turnover rate, on the other hand, remains strong with an annual increase of 11.4%.

On the other hand, it is observed that the construction turnover index decreased by 0.8% in annual nominal terms, which indicates a fall of more than 20% in real terms. As you will recall, the construction sector contracted 12.5% ​​in the last quarter, reducing GDP growth by 0.8%. In summary, although momentum appears strong in overall growth, it should be noted that growth across sectors is highly uneven (see Figures 4-9 below). This may be one of the factors that explains why very strong growth figures are not reflected to the same degree in employment.

Gedik Investment 2021 growth forecast

We continue to maintain our growth forecast conservatively below market expectations. In summary, it is observed that industrial production has gained momentum due to the recovery in domestic demand from the rapid credit incentives in the summer months and has achieved one of the longest uptrends in history. This strong performance appears to have more than offset contractions in certain service sectors due to the epidemic. As you will recall, although we think there may be a significant pullback in domestic demand in the coming months, we lowered our GDP forecast for 2021 from 2.5% to 3.5% on March 1 due to the current momentum growth continues above our expectations. It should be noted that this estimate is still below market estimates of around 4.5-5.0%, or even up to 6.0%.

As we mentioned, there may be bullish risks in this forecast due to the current strong growth momentum. However, considering that tight financial conditions will continue for a long time and the possibility of a further increase in the policy rate has increased, we continue to keep our GDP growth forecast for 2021 conservatively below market expectations. We can say that the broadly defined unemployment rate of 29.1% also supports our expectations.

Serkan gonencler

Economist, Gedik Investment

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