Turkish industrial production plunges in October

Turkish industrial production (the seasonal and calendar adjusted, SA) maintained contraction in October with another sharp -1.9% month-on-month, the third negative reading in a row, not surprising given the impact of summer volatility and the tightening policies leading to a faster than expected rebalancing of the economy. Heavyweight manufacturing once again stood out as the major driver of the contraction, contributing -1.8ppt to the headline, while contributions of "electricity, gas, steam and air conditioning supply" and “mining and quarrying” were slightly negative. The IP (SA) index at the lowest since Jun-17, shows the extent of the weakness in production performance.

The industrial production (calendar adjusted) growth in October turned out to be worse than expected at -5.7% YoY.

Among broad economic categories, all groups with the exception of capital goods were negative, while intermediate goods production was the major driver of the monthly IP contraction with -1.4ppt, followed by undurable consumer goods at -0.4ppt. Durable consumer goods production was also negative with -3.4% MoM, translating into -0.2ppt impact on the headline, but it could have contracted more if the government had not introduced temporary tax cuts on white goods, furniture and automobiles.