Contraction signals continued in the manufacturing industry in September. The manufacturing PMI indicator fell to 44.3 in September. The index hit its lowest level since the coronavirus outbreak.

The Purchasing Managers’ Index (PMI) for manufacturing fell to 44.3 in September, marking the lowest value since May 2020, indicating that the contraction in the manufacturing sector continued to accelerate. As the end of the third quarter of the year approached, companies noted that challenging conditions in demand persisted. Production, new orders, employment, and purchasing activities registered faster contractions compared to the previous month. The manufacturing PMI compiled by S&P Global for the Istanbul Chamber of Industry (ICI) fell from 47.9 recorded in August to 44.3, remaining below the 50 level that separates growth from contraction for the sixth consecutive month.

A SEVERE DROP IN NEW ORDERS
Due to the reported weakness in demand in September, there was a recorded sharp decline in new orders, the most significant in about four and a half years. The impact of weak demand in international markets was also seen in the renewed contraction in new export orders. The new orders sub-index fell from 46.7 in September to 40.8, reaching levels last seen in May 2020 during the pandemic, while the new export orders sub-index also dropped from 50.5 to 45.3.

DECLINE IN ORDERS HIT PRODUCTION
As a result of the decline in new orders, the production recorded the sharpest decrease since May 2020 for the sixth consecutive month. The production sub-index fell from 46.2 in September to 42.8. Weak demand and the decline in production led manufacturers to reduce employment and purchasing activities to a greater extent in September. The employment sub-index fell from 48.6 to 46.9.

DELIVERY TIMES DECREASED AFTER 9 MONTHS
While both input and finished product inventories decreased, weak demand for inputs alleviated pressure on supply chains, resulting in delivery times decreasing for the first time in nine months. The weakness in the Turkish Lira and the increase in raw material prices led to further increases in input costs in September. Despite a decline in price increases to the lowest level in three months, they remained high.