The Turkish Statistics Institute (TurkStat) on Thursday announced the latest capacity utilization rate for Turkey's manufacturing sector, weighted by production value, revealing that the rate of capital utilization in Turkey decreased by 6.5 percent last month over August 2008. The decline in capital utilization in August compared to the preceding month was 2.6 percent. The capacity utilization rate in the manufacturing sector stood at 69.7 percent; it was 76.2 in August 2008.
The TurkStat report cited the shortage of demand both in domestic and foreign markets as the principal factor leading to the downward spiral in rates. According to the figures provided, a shortage in domestic demand contributed to 52.2 percent of the decline; foreign markets can be blamed for 29.8 percent of the decline. Financial problems were assigned 3.7 percent of the blame, a shortage in domestic raw materials caused 3.6 percent of the problem, while labor problems made up 1.2 percent.
Production quantity decreased by 2.6 percent in August compared to the previous month. Observers are predicting that it will increase by 3.5 percent in September. During the same period, the amount of goods sold decreased by 1.3 percent, the price of goods sold increased by 1.4 percent and the cost of raw materials increased by 2.1 percent in August. The amount of goods sold is expected to increase 6.3 percent, while the prices of goods sold are expected to increase by 0.3 percent in September. Raw materials are anticipated to decrease by 0.3 percent in the same month.
The contraction in Turkey's capacity utilization, amid the destructive effects of an ongoing global financial crisis, gained momentum in November when the rate dropped from 72.9 percent the month before to 64.7 percent and then to 63.8 percent in January through February. March and April saw nascent recovery as the figure rose to 64.7 percent and 66.8 percent, respectively. The recovery continued in the following three months with the rate rising to 70.4, 72.7 and 72.3 in May, June and July, respectively. Such an optimistic outlook was welcomed by Turkish business circles, increasing hope for a sustainable recovery in capacity utilization, a gauge widely used to assess the health of the industrial sector. The latest 2.6 percent drop in August, however, suggests that the crisis has not eased yet as it continues to have adverse impacts on the economy. Manufacturing across all sectors continued to drop.
Manufacturing in the food industry was down 1.7 percent in August this year over the same month of 2008, while the textile sector suffered a 2.9 contraction in the same period. The highest decline was seen in the mining industry in August as manufacturing in the sector slumped 9.8 percent over August 2008.
