The Construction Materials Industry Composite Index released every month by the Association of Turkish Construction Material Producers (İMSAD) has been measuring the activities, confidence, and expectations in the construction materials industry since August 2013. The index ended 2016 with a decline of 6.5 points.
The composite index, which was accepted as 100 in August 2013, increased to 103.66 points in 2014. The index fell below 100 points at the end of 2015 due to the political uncertainty and geopolitical developments experienced in 2015 and declined to 97.21 points. The index started 2016 with a rise and increased back to above 100 points in May, reaching 101.8 points. However, it started to fall again after August due to the changes in global conditions, as well as the developments seen after July. The index ended the year with 90.71 points. In December, the composite index fell by 2.07 points compared to the previous month. This decline was influenced by the fall in all three sub-indexes. The decline in activities was higher this time.
The recent developments and the increasing effect of seasonality have been negatively affecting the index. It has been seen that the decline experienced in 2016 in construction materials industry indexes was affected by factors such as the declining value of Turkish Liras, the coup attempt, terrorist attacks, and the war atmosphere in surrounding countries. The 20-year term housing campaigns with an interest rate of 0.70 percent, urban transformation process, and the stimulus packages announced to revive the economy are expected to affect the dynamism in the domestic market in 2017. Moreover, the declining value of the Turkish Liras, terrorist attacks, and the political tensions seen in the constitution referendum process are also expected to affect the indexes in 2017.
Domestic sales, export, and production fall
The activity index declined in December compared to the previous month. Seasonality, in addition to tougher market conditions and weakened expectations, also negatively affected the activities. The activity index fell by 2.4 points in December and remained 5.2 points below last December’s index. December saw a decline in almost all activities. Domestic sales also declined in December compared to the previous month. Export declined in December as well. Production also saw a decline particularly due to the declining domestic sales and export. The declining domestic sales and export also caused financial turnovers to decrease. The activities, on the other hand, continued their stagnant and weak trend due to the market conditions.
Loss of confidence continues
In December, the confidence level declined by 1.8 points compared to the previous month, and it was 8.4 points lower than that of the same month of last year. In the overall year, the highest decline was in the confidence index. The confidence in the general trend of the Turkish economy is getting weak. The confidence in the construction materials industry also weakened. In addition, the confidence in domestic markets showed a significant decline in December. The confidence in exporting markets, on the other hand, remained stagnant. Besides, the developments experienced in non-economic fields continued to negatively affect the confidence. A decrease is expected in non- economic risks in order to recover the confidence. And despite significant economic measures and support, the confidence in the economy and the sectors has yet to show a recovery.
Declining orders weaken expectations
The expectation index has been showing a decline since August. As the stagnation and loss of confidence continue to be effective in the activities, the expectations are being negatively affected. In December, the expectation index fell by 1.8 points compared to the previous month. The index was 4.6 points lower compared to the same period of last year. The decline in the expectations regarding the Turkish economy also continued in December. In addition, the expectations regarding the construction materials industry also declined. Furthermore, domestic orders regarding the next three months significantly declined in December as well. Besides, seasonality started to be effective too. On the other hand, export orders regarding the next three months showed a relatively more limited decline. The production expectation for the next three months also declined due to the decrease in domestic and international orders.
