Türkiye İMSAD Announces June Results for the 'Construction Materials Industry Composite Index'

Decline in activity hurt the sector, while resolution of election uncertainty provided support

The Construction Materials Industry Composite Index fell by 1.91 points in June to reach 96.72 points. The Composite Index thus declined 4.60 points over the past three months. Activity showed a significant contraction. Confidence and expectations experienced limited decline in June. The fact that the Composite Index remained below 100 points in June was mainly driven by the substantial decline in the Activity Index. The June 2018 results of the Construction Materials Industry Composite Index, regularly published monthly by the Turkish Construction Materials Manufacturers Association (Türkiye İMSAD), have been announced. According to the Composite Index, which noted that Ramadan and holiday breaks limited activity in June and that domestic sales, production, exports and revenues experienced sharp declines, the following information was provided: Activity in the construction materials industry contracted significantly in June compared to the previous month. The traditional impact of Ramadan, the reduction in working days due to the holiday, and most importantly, the uncertainties created by early elections negatively affected the activities of the construction and construction materials sectors. This situation also had a negative impact on developments in financial indicators. The Activity Index, which had not experienced a high monthly decline for some time, dropped 4.0 points in June from the previous month. While all activities showed marked contractions, domestic sales registered a sharp decline in June. Exports declined in June compared to the previous month for the first time in a long period. With the reduction in working days, production also contracted. Revenues declined in June due to falls in domestic and foreign sales. However, foreign sales prices continued their gradual increases.

Export markets were the only area showing growth in the Confidence Index

The pace of decline in the Confidence Index slowed in June. Despite the sharp drop in activity, the resolution of election-related uncertainties was instrumental in slowing the decline in the Confidence Index. Confidence levels fell 1.1 points from the previous month. In June, confidence levels fell 5.5 points below June of the previous year. Confidence losses regarding the Turkish economy, the construction sector and the construction materials industry continued at a slower pace in June. Confidence losses also occurred in domestic markets in June. Confidence in export markets, however, increased again in June. Export markets were the only confidence area showing growth.

Expectations contracted very modestly

The deterioration in expectations that began in April with the early election decision was felt less acutely in June. Despite the sharp drop in activity and continued confidence losses, the resolution of election-related uncertainties led to a more limited contraction in expectations. The Expectations Index fell 0.8 points in June from the previous month. Over April, May and June, expectations thus fell a total of 4.1 points. With this decline, June expectations fell 0.3 points below the expectations level of the same period in the previous year.

Expectations regarding the construction materials industry fell modestly in June

The sharp decline in domestic orders for the coming three months continued. The increase in export orders for the coming three months continued in June. With the resolution of election uncertainty, expectations for production and employment for the coming three months again showed modest increases. Recovery in activity alongside improvements in confidence and expectations will depend on the policies to be implemented in the economy and other measures to be taken. In particular, the improvement of deterioration observed in financial indicators will be of major importance and priority.