Turkey Export Orders Drive Manufacturing Improvement

Turkey’s manufacturing sector expanded in August after contracting for the first time in a year the month before, buoyed by a falling lira and rising export orders.

A gauge of manufacturing increased to 50.9 in August, according to the HSBC purchasing managers’ index released by Markit Economics today. That’s up from 49.8 in July and below a 2013 peak of 54 in January. A reading above 50 indicates expansion and below 50, a contraction.

The Turkish lira has been hit by an emerging markets selloff triggered by fears the U.S. Federal Reserve will cut back stimulus that had increased the capital in circulation. Lira weakness combined with improved business conditions gave a boost to export orders, Melis Metiner, an HSBC economist in Istanbul, said in an e-mailed statement.

“After dipping into contraction territory in July, manufacturing conditions showed improvement in August,” Metiner said. “Both total orders and export orders rose, but the latter improved more sharply.”

The lira strengthened 1.2 percent to 2.0137 per dollar at 10:14 a.m. in Istanbul, paring year-to-date losses to 11.4 percent to become the worst-performing emerging markets currency in Europe, Africa and the Middle East after South Africa’s rand.

The yield on benchmark two-year notes fell 16 basis points, or 0.16 percentage point, to 9.78 percent. That compares with a 2013 low of 4.79 percent on May 17.

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