Turkey’s manufacturing sector edged closer to stability in December 2025, with the İstanbul Chamber of Industry Türkiye Manufacturing PMI climbing from 48.0 in November to 48.9. Although still below the 50.0 threshold that marks expansion, this twelve-month high signals the slowest contraction in the industry over the past year. The data, gathered between December 4-16, reflect modest improvements amid ongoing inflationary pressures and subdued business conditions.

Manufacturing Activity Shows Signs of Moderation

Despite remaining in contraction, Turkey’s manufacturing PMI indicates easing declines across key indicators. New orders fell at the softest rate since March 2024, supported by reports of increased customer demand from several companies. Production was scaled down for the twenty-first month consecutively but at the slowest pace recorded in a year. Employment also experienced its thirteenth straight month of decline; however, the rate of job losses in December was the smallest since March 2025. Some firms cited staff resignations, while others increased hiring to meet growing demand.

Purchasing activity saw a softer decrease in December, accompanied by significant reductions in inventories of both raw materials and finished goods. Meanwhile, inflationary pressures intensified late in the year. Input costs surged sharply, driven mainly by rising raw material prices. This cost increase compelled manufacturers to raise selling prices at the fastest rate in eight months, adding to the sector’s challenges despite improving order books.

Sector Implications and Analyst Commentary

Andrew Harker, Economics Director at S&P Global Market Intelligence, highlighted the improved PMI performance and its potential implications: “With the İstanbul Chamber of Industry Türkiye PMI Manufacturing Index reaching its highest level for a year in December, the manufacturing sector takes some momentum into 2026, giving hope that we will see growth in the months ahead.” He noted that stronger customer demand at the end of 2025 helped ease slowdowns in new orders, output, and employment.

Turkey’s manufacturing sector remains a critical driver of the national economy. The gradual easing of declines across production, new orders, and employment suggests cautious optimism among manufacturers. However, rising inflation pressures and raw material costs remain important headwinds, which policymakers and investors will monitor closely as the sector potentially transitions towards growth.

Manufacturing: Market Outlook

The December PMI increase to 48.9—the highest reading since late 2024—signals a meaningful moderation in Turkey’s manufacturing downturn. Though expansion is not yet achieved, this positive momentum, supported by softer declines in output and employment alongside improved demand, sets a foundation for a possible recovery in 2026. Inflationary pressures, however, underscore ongoing risks that could temper growth prospects.

Investors and market analysts are likely to focus on forthcoming PMI releases and inflation trends to assess the manufacturing sector’s ability to sustain stabilization. As the sector remains near contraction but shows signs of improvement, its trajectory will be a key indicator of Turkey’s broader economic health in the months ahead.