The Construction Materials Industry Composite Index, prepared by Turkey IMSAD, fell to its lowest levels after the pandemic in November due to seasonality and deterioration in market conditions. The contraction in foreign markets and exports, in particular, points to the increasing stagnation. As the election approached, expectations for support for the domestic market increased. High costs, inflation and difficulties in accessing finance weakened expectations for the Turkish economy.
November results of the Construction Materials Industry Composite Index prepared by the Turkish Construction Material Industrialists’ Association (Turkey IMSAD) have been announced. The decline in the Composite Index, which started early in September, continued in November due to seasonality.
While the contraction in foreign markets and exports indicates an increasing stagnation, the domestic market remains relatively active. Support for the domestic market is expected as the election approaches.
Stagnation in the index became evident
Construction Materials Industry Composite Index decreased slightly in November. While there was a limited decline in activities in November, the weakening in confidence and expectations continued. In this period, the contraction in domestic and especially foreign demand limited confidence and expectations.
The Composite Index fell by 0.26 points in November to its lowest post-pandemic levels with 69.52 points. Seasonality and deterioration in market conditions were effective in the decline. The global slowdown and internal risks started a new weakening period.
The contractions in domestic and foreign demand in the last months of the year indicate that there will be decreases in activities in the coming months. Economic and financial conditions are also expected to limit the Composite Index.
The slowdown in domestic sales and the decline in foreign sales weaken the activities
Construction materials industry activities showed a very limited decline in November. In the last three months, while the activities have become more and more stagnant, the slowdown effect in the domestic market at the end of the high season limited the activities. In this period, the slowdown effect in foreign markets was also felt more. Financial difficulties and high costs also had an impact on the activities.
Activity Index decreased by 0.1 points in November compared to the previous month. While different trends are emerging in sub-activity groups, the activity continues at a slower pace with a limited increase in the domestic market.
Domestic sales showed a limited increase in November. Exports, on the other hand, recorded a decline after a long time in November, while unit prices also declined after a long time. After October, the increase in production was limited in November. While the activities became more and more stagnant, the return in the domestic market was remarkable. The slowdown in foreign demand, on the other hand, became more pronounced. Financial difficulties and high costs also slowed down the activities.
Confidence Index remained fragile and weak in the last quarter of the year
Confidence Index continued to decline in November as well. Especially the decrease in foreign market activities caused the loss of confidence. Although the increase in domestic sales supports confidence, high construction costs and difficulties in accessing finance cause weakening. As the election approaches, support expectations for the sector limit the decline in confidence.
While the level of confidence decreased by 0.12 points in November compared to the previous month, it shows a gradual weakening tendency in the second half of the new year with its fragile structure. During this period, the level of confidence in the Turkish economy declined to a very limited extent. Confidence in the construction sector showed a limited decline. Confidence level in domestic markets decreased to a limited extent, while confidence in export markets declined in November.
While confidence remains fragile and weak in the last months of the year, many factors such as the slowdown in the markets as well as difficulties in accessing finance, geopolitical risks and high costs limit confidence.
Decreases in domestic and foreign orders had a negative impact on expectations.
In November, the Expectations Index decreased slightly, losing 0.5 points compared to the previous month. Thus, the Prospects Index has fallen over the past seven months. The losses in the domestic and foreign market indicators continued. Due to the decline in orders, production and employment expectations also weakened in this period. In addition, the weakening in domestic and foreign market conditions was effective, while the decline in orders had a negative impact.
The decline in expectations regarding the Turkish economy remained limited. High costs and inflation, as well as difficulties in accessing finance, weakened economic expectations. Domestic orders for the next three months continued to decline, while export orders continued to decline in November. The contraction in export markets is felt more clearly in this period. The production expectation for the next three months also decreased. Production expectations declined due to the decrease in domestic and foreign demand.
The weakening in domestic and foreign demand caused expectations to decline in November as well. Expectations regarding the export markets and the domestic market show that there will be a contraction in the activities as well.