Services and Retail Trade Gained Confidence while Construction Sector Lowered Expectations
Confidence index data released by the Turkish Statistical Institute (TurkStat) and the Central Bank of the Republic of Turkey (CBRT) in October 2024 revealed the changes in confidence in different sectors. According to the data, services and retail trade sectors painted an optimistic picture, while confidence in the construction sector continued to decline. On the other hand, real sector confidence index moved into the optimistic zone after four months.
Increase in Confidence in Service Sector
According to TURKSTAT’s seasonally adjusted confidence index, confidence in the services sector increased by 1.5% to 114.2 points in October. This optimism reflects a positive outlook towards the current situation and future expectations in the services sector. This increase in confidence in the sector indicates that the economy continues its service-oriented growth trend.
Limited Increase in Retail Trade, Loss of Confidence in Construction
Confidence index in the retail trade sector increased slightly by 0.1% to 110.7 points in October. This small increase in the retail sector suggests that consumer demand and trade volumes are holding steady. However, the picture is not as optimistic for the construction sector, where the confidence index fell by 1.7% to 86.3 points. A confidence index in the construction sector below 100 points indicates that optimistic expectations in the sector have weakened and a pessimistic mood prevails in the sector.
Real Sector Confidence Index shifted back to the optimistic side
According to the October 2024 Business Tendency Statistics and Real Sector Confidence Index (RCCI) data released by the Central Bank of the Republic of Turkey (CBRT), the real sector is experiencing an optimistic turn. The seasonally adjusted real sector confidence index rose by 3 points to 102.2 points in October. This indicates that the index has moved back into the optimistic zone after four months and underlines the improvement in the real sector.
Surveyed enterprises expect an increase in production volume, orders and investment expenditures for the next three months. However, optimism regarding export orders has slightly decreased. Businesses stated that the rate of those expecting an increase in costs decreased, while the prediction for an increase in sales prices increased.
Expectations for Cost and Price Increases Persist
The majority of enterprises reported that they felt the increase in costs in the last three months. Selling prices are also expected to increase in the next three months, but the number of businesses expecting an increase in unit costs has decreased. These expectations are coupled with the decline in the annual producer price index (PPI) expectation to 47.4% compared to last month.
How does economic data affect investor confidence?
These data show signs of improving confidence in various sectors in Turkey. Improvement in the services and retail trade sectors in particular may encourage investors. On the other hand, declining confidence in the construction sector indicates that investments in this area may slow down. The fact that the confidence index in the real sector has shifted to the optimistic side indicates that the recovery process in the economy may gain momentum.
In the coming months, this increase in confidence in the services and retail trade sectors is expected to contribute positively to economic growth. Moreover, this optimism in the real sector may contribute to boosting business confidence and supporting long-term investment plans.
