The Istanbul Chamber of Industry and Istanbul Turkey Chamber of Industry prepared in collaboration with IHS Markit Purchasing Managers’ Index Order Manufacturing (PMI) rose 0.9 points to the 52.6 level increase of the previous month in March. Figures above 50.0 in the PMI index indicate an overall improvement in the sector. As indicated in the report published in March, “while new orders grew again, increases in production and employment continued, and difficulties in the supply of raw materials continued.” The main driver of the increase in orders was the acceleration of export orders. Global cargo transportation difficulties hinder the supply of raw materials, while delivery times It went up compared to February. With the depreciation of the Turkish lira in March, input costs and product prices rose rapidly. With the effect of increased orders and production, employment growth in the manufacturing sector continued.
In particular, our largest trading partner Germany and the Euro Zone manufacturing sector to record growth in March, increased production while increasing export orders for Turkey’s supporting economic growth. Therefore, I can say that the relatively modest improvements recorded in the manufacturing sector in the first quarter of 2021 are the most important factor supporting industrial production and therefore GDP growth.
Similarly, the SAMEKS Industry Sector Index, which was published by MUSIAD on March 31 and revealed a similar methodology with the PMI indices, showed that it remained in the growth zone with a benchmark value above 50, although it decreased 0 , 9 points in March compared to the previous month and fell to 50.8. Although new orders fell 0.3 points to 47.6 from the previous month, the production index rose to 53.0 with an increase of 4.2 points from the previous month. Both PMI indices also revealed that the reason for falling stocks due to border issues in cross-border supply chains in March accelerated the acquisition of the manufacturing sector in Turkey. On the other hand, we received the signal that the growth rate of employment in the manufacturing sector of the SAMEKS index experienced a sharp decline in March compared to the previous month.
In summary, according to IHS Markit data, while the Covid-19 restrictions brought an improvement in the number of cases globally, especially in March, an increase in export orders and production was observed, while problems input costs increased in the supply chain. and parallel production prices, which increases inflationary pressure. Global improvements in Turkey’s exports to support increased orders. In more detail, I have summarized the developments in the global manufacturing sector based on regions and countries below.
USA (58.6 to 59.1): Despite strong growth in new domestic and export orders, production increased moderately due to raw material constraints; employment, input costs, and product prices increased.
Brazil (from 58.4 to 52.8): With the effect of the new Covid-19 restrictions, new orders, employment and production moved to the contraction zone; Inflation requests stalled. Increasing problems in the supply chain led to extended delivery times, increased costs of inputs and prices of products.
Canada (54.8 to 58.5 ′): production, new domestic and export orders, purchases, employment, delivery times, inflationary pressures increased.
The PMI index for the euro zone, which includes Germany, Austria, France, the Netherlands, Ireland, Spain, Italy and Greece, rose to 62.5 in March, 4.6 points higher month-on-month. Manufacturing sector PMIs for all index countries grew compared to February from 51-67 values in March supported by growing domestic and export orders. The lowest growth corresponds to Greece with 51.8. The German PMI index, our largest trading partner, hit its all-time high at 66.6. The main factor in the growth of the German manufacturing sector is the continuous increase in new export orders from Asia, especially China and the United States. Increased demand and supply chain problems led to sharp increases in input costs and product prices in the euro zone. Increases in orders and production brought with them an increase in employment in the manufacturing sector throughout the Region.
Source: IHS Markit
England: As one of our largest export markets, the UK manufacturing PMI index rose to its highest level in 10 years at 58.9 in March. Production and employment increased with the increase in domestic and export orders. It was noted that there were increases in export orders, especially from Europe, Asia and the United States. Although constraints in the supply chain caused shortages of raw materials, input costs increased more rapidly in the last 50 months, cost increases were reflected in producer prices.
ASIA AND THE FAR EAST
Australia (from 56.9 to 56.8): production, domestic orders increased, exports weakened; delivery times, input costs and product prices increased.
China (50.9 to 50.6): production, domestic orders and employment increased moderately; Export orders, input costs and producer prices increased, increased lead times weakened.
Source: IHS Markit
Indonesia (50.9 to 53.2): increased production, domestic orders, employment, delivery times, input costs; The rise in producer prices was limited, export orders fell.
South Korea (unchanged at 55.3): production, domestic and export orders, employment, delivery times increased; the increase in input costs was partially reflected in product prices.
Japan (from 51.4 to 52.7): production (mainly automotive and semiconductors), domestic orders, employment, delivery times, input costs and product prices increased; Despite demand from Asian countries, including China, the increase in export orders was limited.
Malaysia (from 47.7 to 48.9): production, domestic orders, employment increased, export orders decreased; delivery times, input costs and product prices increased.
Myanmar (27.7 to 27.5): Factories are closed due to political unrest sparked by the military coup and protests across the country. Commodity shortages and severe losses in local currency are putting upward pressure on prices.
Russia (51.5 to 51.1): moderate increase in production and domestic orders, decrease in export orders; delivery times, input costs and production prices increased.
Thailand (47.2 to 48.8): new export orders increased; production, domestic orders and employment decreased; delivery times, input costs increased, product prices were unchanged.
Taiwan (from 60.4 to 60.8): Production, domestic and export orders, employment, delivery times, input costs, and product prices increased.
Vietnam (51.6 to 53.6): Production, domestic and export orders, employment, delivery times, input costs, and product prices increased. Steel prices and price increases for products purchased in China were instrumental in increasing input costs.
Dr. Fulya Gurbuz
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