Turkish Manufacturing Contracts Slightly in July, PMI Shows

Turkey's manufacturing sector experienced a marginal contraction in July, continuing a trend of subdued market conditions and weakening demand, both domestically and internationally. The Istanbul Chamber of Industry Turkey Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, edged up to 47.7 from 47.1 in June, remaining below the 50-point threshold that separates growth from contraction.

Andrew Harker, Economics Director at S&P Global Market Intelligence, noted that the second half of 2026 began similarly to the first, with manufacturers struggling for growth amid muted demand. He highlighted that the war in the Middle East exacerbated these conditions, particularly impacting export demand. New orders continued to fall, though at a slightly slower pace than in June, as firms cited subdued market conditions and price pressures as key factors.

Production declined for the second consecutive month, albeit modestly, according to the survey. Employment also decreased, with some companies reporting resignations. Purchasing activity and inventories were scaled back in response to the weak demand. Inflationary pressures showed signs of easing, with input costs rising at the slowest pace since November 2025 and output price increases reaching their weakest point of 2026 so far.

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The second half of 2026 began in much the same way as the first half ended, with Turkish manufacturers struggling to generate growth amid a muted demand environment, exacerbated by the war in the Middle East.