Prepared by Turkey İMSAD, Construction Materials Industry Composite Index had the sharpest decline in recent months in July as a consequence of the extended nonworking holidays. The Composite Index fell to 72.20 points with a loss of 2.56 points. Thus, in the last three months, the Composite Index has significantly given away the recovery realized after the pandemic. The weakness in the Composite Index is expected to continue due to the slowdown in domestic and foreign demand, economic risks and challenges in access to financing in the high season.
There was a sharp decline in industrial activities in July
Despite the positive contribution of the construction season, there was a significant decline in the activities of the construction materials industry due to long holidays and the recession in markets. While the recessions in domestic and foreign demand had an impact, high inflation and costs still maintain their restraining impact on the activities. Having a leap in June, the Activity Index fell by 5.1 points in July compared to the previous month and sharp losses also happened in all activity groups. The recession perceived in domestic and external demand was obvious. Exports declined significantly in this period as well as the domestic sales. Turnovers fell despite the inflation contribution due to the decreased number of working days and weakening domestic and foreign demand reduced production.
Confidence Index started the second half of the year also with a decline
Having started the second half in a downward trend with a fragile and weak structure, the Confidence Index was not able to change its course also in July. The confidence level declined by 1.28 points in July compared to the previous month. While the sharp decline in activities aggravated the confidence loss, uncertainties regarding foreign markets and economic factors such as high inflation, high cost increases and depreciation of the Turkish lira had an impact. The recession perceived in export markets also limited confidence. While confidence in the Turkish economy had a slight declined, decline of confidence in the construction sector and the construction materials industry was more limited. While confidence in domestic markets was in a slight decline, confidence in export markets also declined.
Expectations are getting weaker due to declines in purchase orders
Expectations Index also continued to regress in July with a decline by 2 points compared to the previous month. Losses in the sectoral indicators continued while sub-indicators pertaining to economy regressed in this period. Continued declines in domestic and foreign orders weakened the expectations too. Thus, the Expectations Index has declined for the last three months. It was seen that the high season could not support the expectations in this period.
A limited regression was experienced in the Turkish economy. High costs and inflation as well as challenges in accessing to financing stood out as the aspects that weakened economic expectations. Domestic orders placed for the next three months also declined significantly. High costs limited the domestic orders despite the high season. Export orders placed for the next three months also declined in July. The recession in export markets also had a negative impact on expectations. Production expectations weakened especially due to the decline in domestic and foreign demand while production expectations for the next three months decreased in July.
In July, the recession in domestic and foreign demand and the sharp declines in activities weakened the expectations for the following months despite the high seasonality. There is a high expectation for a recession in export markets and the domestic market, in the second half of the year.
