MÜSİAD's SAMEKS data for May 2019 has been announced. Accordingly, the seasonally and calendar adjusted SAMEKS Composite Index fell by 1.8 points compared to the previous month to 41.9

In May 2019, the seasonally and calendar adjusted SAMEKS Composite Index fell by 1.8 points compared to the previous month to 41.9.

This decline observed in the index was driven by the industry index falling 5.1 points compared to the previous month to 41.1 points, while the services index also fell 3.6 points compared to the previous month to the level of 40.3, indicating that the slowdown in the sector continues.

While the slowdown in production due to the decline in new orders and input purchases was decisive in the loss of momentum observed in the industrial sector, the sharp decline in input purchases in the services sector caused business volume to contract.

Thus, the slowdown that began in September 2018 continued in the May 2019 period as well, and the seasonally and calendar adjusted SAMEKS Composite Index presented a negative outlook for the real sector.

Industry Sector SAMEKS Index

In May 2019, the seasonally and calendar adjusted SAMEKS Industry Sector Index fell by 5.1 points compared to the previous month to the level of 41.1.

New orders in the industrial sector recorded a decline of 6.9 points compared to the previous month and were the main determinant of the fall in the index.

In parallel with the decline observed in new orders, a loss of momentum of 5.9 points was recorded in input purchases. While the fall of input purchases below the reference value of 50 ranked among the leading factors adversely affecting production in the industrial sector, the production sub-index for the sector fell by 7.9 points at once to the level of 37.7.

The continued weak course of production in the industrial sector went on affecting employment in the sector adversely. The employment sub-index, which has remained below the reference value of 50 since the April 2018 period, fell by 1.6 points compared to the previous month to the level of 41.2.

Thus, while the seasonally and calendar adjusted SAMEKS Industry Index reached its 11th consecutive month below the reference value of 50, the loss of momentum observed in the industrial sector presented a negative outlook for the growth figures for the 2nd quarter of 2019.

Services Sector SAMEKS Index

In May 2019, the seasonally and calendar adjusted SAMEKS Services Sector Index fell by 3.6 points compared to the previous month to the level of 40.3.

Input purchases for the services sector fell by 10.7 points at once compared to the previous month, coming in at the level of 44.1. The fall of input purchases below the reference value of 50 was the main determinant of the loss of momentum in the services sector.

Owing to the loss of pace in input purchases, business volume in the sector recorded a decline of 4.7 points compared to the previous month, falling to 30.0 points, a level that stands out as the lowest in the history of the index.

The rapid decline in business volume owing to the loss of momentum in purchases led firms to consume their existing stocks in this period, and the finished goods stock sub-index fell by 6.0 points to the level of 37.4.

In connection with these developments, the employment sub-index for the services sector also continued to decline, falling by 5.2 points compared to the previous month to the level of 39.3.

Thus, the seasonally and calendar adjusted SAMEKS Services Sector Index, which showed a marked recovery in February and March, continued in the May period the loss of momentum that began in April and presented a negative outlook for the sector as a whole.

COMMENTARY/ANALYSIS:

The seasonally and calendar adjusted SAMEKS Composite Index, which fell by 3.6 points in April compared to the previous month and indicated that the slowdown in the real sector was continuing, maintained its negative outlook in May as well, falling to 41.9 points. In this period, the Economic Confidence Index, one of the important leading indicators of economic activity, took its lowest value since since October of last year; while the Real Sector Confidence Index also fell by 5.3 points to the level of 94.7. On the other hand, the rise of the capacity utilization rate in manufacturing industry by 1.1 points to %76.1 was a positive indicator for the industrial sector in this period. In parallel with the rebalancing process experienced in the Turkish economy, the slowdown in economic activity is expected to persist throughout the 2nd quarter of 2019, and the recovery process in the real sector is expected to become evident from the second half of the year onwards.