Industrial production in September posted 6,4% growth over last year, thus staying above the market consensus. Meanwhile, adjusted for seasonal and working day effects, industrial production, expanded by 5,8% over August. The major contributors to growth were computers, electronic and optical products, publishing, furniture, as transportation vehicle was the main drag.
From a broader perspective, in terms of the underlying trend, the data indicated a much stronger performance than imagined. The surprise was mainly linked to the fact that the leading indicators such as the capacity use, electricity consumption, steel production were consistent with a poorer outlook.
Regarding the composition of the industrial output, capital goods production holds pretty well, consumption goods and intermediate goods also support but are relatively weaker.
Shortly, manufacturing performance is highly mixed. This is a retracement of weak figures of the previous month and not actually a visible pick-up in growth. In my view, the government has limited tolerance for below-target growth, but, on the other hand, the Central Bank of Turkey has dovish inclinations about the acceleration of credit growth. Even though, elevated capital goods production is a good sign of progress for domestic investments recovering which has been the missing engine of the piston since the beginning of 2011.
Nevertheless, it is only after exports need to gain speed on the basis of the policy run by policymakers, then Turkey may reach its superordinate macro goals.