Turkish Industial Output Drops for First Time in 2013

Turkey’s industrial output unexpectedly dropped in August, the first annual decline this year, on falls in the clothing and refined petroleum industries.

Industrial growth on a workday-adjusted basis fell 0.1 percent from a year ago, the first decline since December, the statistics agency said today. Output was expected to rise 4.1 percent according to the median of eight estimates in a Bloomberg survey. Industrial production fell 4 percent from the previous month on a workday and seasonally adjusted basis.

“The industrial output figures are surprising for us,” Inanc Sozer, economic research manager at Odeabank AS in Istanbul, said by phone. “Industries relying on domestic demand seem weak.”

Finance Minister Mehmet Simsek said in a televised interview with CNNTurk yesterday that the government will probably today announce its revised economic targets for the year and update its medium-term economic plan. Government officials, including Simsek, have repeatedly said year-end growth may be below the original target of 4 percent.

The lira strengthened 0.14 percent to 1.9907 per dollar at 12:01 p.m. in Istanbul, paring the year-to-date declines to 10.4 percent to become the second-worst performing major emerging market currency in Europe, Africa and the Middle East after South Africa’s rand. Yields on benchmark two-year notes were down 34 basis points, or 0.34 percentage point, to 7.94 percent, according to data compiled by Bloomberg.

Eid Holiday

Eid holiday, which marks the end of the holy month of Ramadan, explains some of the fall in industrial activity in August, according to an e-mailed note by Burgan Securities economists Haluk Burumcekci and Asli Savranoglu Seren in Istanbul. While adjustments for working days are meant to eliminate the impact, they fail to “fully capture the length of the holiday,” the economists said in the note.

Other economic data including PMI, which rose to 54 in September from 50.9 in August, suggest activity may have rebounded last month, according to Burgan Securities. Exports rose 11.1 percent from a year ago to $12.5 billion in September on the back of recovering demand in major trade partners, according to Turkish Exporters Assembly.

“PMI, confidence indexes and exports indicate strong performance in September, driven by the acceleration in external demand, particularly in the euro area,” Burumcekci and Seren said. “We maintain our gross domestic product growth forecast at 3.5 percent for 2013, with no major downside risk on the horizon.”

Before it's here, it's on the Bloomberg Terminal.