In July 2019, the seasonally and calendar adjusted SAMEKS Composite Index declined by 2.8 points compared to the previous month, falling to 43.7.

This decline observed in the index was driven by the services index falling by 3.7 points compared to the previous month to 43.1, while the industry index also declined by 1.4 points to 46.4, continuing its decrease.

The continuation of input purchases for both sectors above the reference value of 50 indicates that firms maintain their positive expectations for the coming period. While the continued weak course of new orders in the industrial sector continued to affect production adversely, a continued loss of momentum in business volume is also observed in the services sector. Thus, the SAMEKS Composite Index, which maintained its course below the reference value of 50 in July as well, indicated that the weak outlook for the real sector persists and presented a negative picture for the growth data of the third quarter of the year.

Industry Sector SAMEKS Index

The seasonally and calendar adjusted SAMEKS Industry Sector Index declined by 1.4 points compared to the previous month in July 2019, falling to 46.4. Although input purchases for the sector decreased by 2.7 points, they were realized at 51.8, maintaining their positive outlook. In the new orders sub-index, a decrease of 0.4 points was recorded compared to the previous month. Thus, the continued weak course of new orders continued to affect production in the industrial sector adversely. The production sub-index, which remained at 44.2 despite an increase of 2.2 points compared to the previous month, indicated that the weak course in industrial production has been carried into the 15th consecutive period. The finished goods stock sub-index, which fell by 8.0 points at once compared to the previous month to 44.1, shows that in this period firms went down the path of running down their existing stocks. In parallel with the weak course in production, the decline in employment for the sector continued in July as well. The employment sub-index, which fell by 8.0 points compared to the previous month, was realized at 46.4. Thus, the downward trend that began in June of last year in the seasonally and calendar adjusted SAMEKS Industry Index continued in the July 2019 period as well.

Services Sector SAMEKS Index

The seasonally and calendar adjusted SAMEKS Services Sector Index declined by 3.7 points compared to the previous month in July 2019, falling to 43.1. Business volume for the sector, which had ended a two-month decline and turned to an increase in the June period, turned downward again in July, falling by 2.7 points to 37.6. In this period, although input purchases decreased by 4.7 points compared to the previous month, they were realized at 52.2 and presented a positive picture for the outlook of the services sector in the coming period. The suppliers' delivery time sub-index, which fell by 7.0 points at once compared to the previous month to 45.5, signals that there are disruptions in the real sector's supply of raw materials and intermediate goods. In parallel with the weak outlook across the sector, a decline of 2.6 points occurred in the employment sub-index and it fell to 42.8. Thus, the seasonally and calendar adjusted SAMEKS Services Sector Index maintained its course below the reference value of 50 and continued its negative outlook.

COMMENTARY:

The SAMEKS Composite Index, which remained below the reference value of 50 throughout the first two quarters of the year, also started the third quarter below the reference value, indicating that the stagnation in the real sector persists. The other data on the real sector released in the same period also confirmed SAMEKS. While declines were recorded in the Real Sector Confidence Index and the Manufacturing Industry Capacity Utilization data released by the Central Bank of the Republic of Türkiye (CBRT) in July, a decrease was also observed in the Sectoral Confidence Indices released by TÜİK. On the other hand, the new management of the CBRT lowering the policy rate from %24 to %19.75 at its meeting for July and signalling that interest rate cuts will continue in the coming period was welcomed positively by the markets, and thus, together with the decline in borrowing costs, demand and growth are expected to revive.