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Turkey Manufacturing Shrinks On Coronavirus Outbreak

Turkey's manufacturing sector deteriorated for the first time in three months in March, driven by the impact of the coronavirus disease on activity, survey data from IHS Markit showed on Wednesday.

The Istanbul Chamber of Industry Turkey Manufacturing purchasing managers' index, or PMI, fell to 48.1 in March from 52.4 in February. Any reading below 50 indicates contraction in the sector.

Moderation in output and new orders was due to the adverse impact of the spread of COVID-19. Production softened for the first time in five months, while new business easing ended a two-month sequence of expansion.

New export orders softened to a larger extent, and the weakening was greater than that seen for total new business.

Meanwhile, additional staff were hired in March, albeit slower workloads in the sector. Employment rose for the third straight month due to increase in new order inflows in previous months.

Stocks of purchased decreased in March and the delivery of purchased items was affected by the COVID-19 widespread, with suppliers' delivery times lengthening to the second-largest extent since June 2005.

On the price front, the rate of input cost inflation remained marked during March, thus manufacturers increased their output prices. The rate of charge inflation was sharp and the steepest under a year-and-a-half.

"The COVID-19 pandemic comes at a time when the Turkish manufacturing sector was building good growth momentum, and is therefore a bitter blow for firms," Andrew Harker, economics director at IHS Markit, said.

"One positive, however, was that employment continued to rise, potentially reflecting hopes among firms that the disruption will prove short-lived," Harker added.

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