According to the data announced by the Istanbul Chamber of Industry (ISO) and IHS Markit; Manufacturing PMI fell to 51.2 from 52.5 in October. In October, when disruptions in supply chains limited demand and production, a partial slowdown signal is observed, although the net growth position is still maintained. At the same time, disruptions in the supply of raw materials and the depreciation of the lira cause inflationary pressures to increase in the sector. PMI has been in growth zone above 50 basis points since June 2020, excluding May 2021 (closing effect).
If we look at the details of the PMI data; production slowed down for the first time in the last 5 months. Signs of slowdown in the sector came to the fore especially in data on production and new orders. In this context, both indicators lost pace at the start of 4Q21. The slowdown in the supply of inputs and the negative fluctuations in exchange rates were effective in limiting the activity. Among the factors limiting new orders, the inadequacy in the supply of electronic parts came to the fore. It is seen that delays in the supply chain, difficulties in supplying materials, transportation problems and difficulties in importing goods also extend delivery times. Against this; strong foreign demand supported the outlook in export orders, contrary to the general trend. On the other hand, on the stocks side, an increase is observed with the approach of being procured against the demand and raw material supply constraints that may be brought forward against the effect of possible price increases in the future.
On the inflation side; The input cost effect created by supply constraints and the negative contribution of the lira’s depreciation in recent months accelerated price increases. Therefore, firms reflect their increased costs on the price of goods sold. This shows that input costs in the sector may lead to additional price hikes. Botaş has increased natural gas prices for industrial users by approximately 48% as of November 1. We expect this effect, which will stratify production costs, to maintain inflationary pressures in the sector.
While we continue to view the growth momentum as positive in general, we care about the production gap risk of the problems in the global supply chain, as well as the increased production costs due to input costs and exchange rate effects. Therefore, within the framework of the dynamics concerning the sector, we see that both activity and prices are related to the global input supply and the exchange rate variable. We expect the effects of these factors on the production and demand balances in the economy to be challenging for companies in terms of 4Q21.
Kaynak Tera Yatırım
Hibya Haber Ajansı
Kaynak: Hibya Haber Ajansı