Turkey: Capacity utilization sees 19-month high

ANKARA

Turkey's manufacturing capacity utilization rate climbed to 75.9 percent in July from 75.1 percent in June, according to a report from the Central Bank of the Republic of Turkey on Monday.

It was the highest value in 19 months, driven largely by a sharp increase in durable goods production, to 75.4 percent in July from 72.7 percent in June, the report said.

Investment goods and consumer goods were also higher, to 76.7 percent and 73.1 percent in July respectively, from 75.4 percent and 72.1 percent in June.

Analysts pointed to the correlation with German business confidence, also released by the Ifo on Monday. Confidence was up to 108 points, the German index showed, from 107.5 in June.

"Expectations may recover for the second half of the year supporting external demand for Turkish car manufacturers," said Boris Tamer Yildiz of Ziraat Securities in Istanbul.

"Turkish car makers have adjusted their work schedules to make up for lost output in May [a period when some Turkish auto workers went on strike]. That may lead to the continuation of increased capacity utilization levels in the sector," Yildiz said.

Capacity utilization by intermediate goods producers, the Turkish car industry’s largest area of output and export to Germany, were up to 77 percent from 76.5 percent in June, the central bank report said.

“Durable goods producers, especially domestic appliance producers, also experienced a buoyant year in Turkey; sales are at their highest in recent memory. Car and durable goods producers may help real sector confidence to stand its ground," Yildiz explained.