TR Monitor

CUR down contrary to real sector confidence


Capacity Utilizatio­n Rate (CUR) in the manufactur­ing industry THE nearly hit a 3-year low in March, according to the Central Bank.

This isn’t a monthly movement. There is a significan­t tendency. The CUR has generally declined since the end of 2021. I am talking about 15 months. The seasonally-adjusted CUR fell to 74.2% in March.

The manufactur­ing industry gradually operates at low capacity. The CUR, which significan­tly declined in mid-2020 due to the pandemic, started to increase and generally showed an upward trend during 2021.

The CUR decreased by 1.5 points in March, as compared to February. Such a decline is not common to be seen in a month. I don’t think that such a considerab­le drop stemmed from the earthquake. The fall was just 0.1 points in February when the earthquake occurred.

The CUR declines in the manufactur­ing industry, but apparently, this situation doesn’t cause despair. On the contrary, the real sector’s confidence in the economy gradually rises.

The Real Sector Confidence Index (RSCI) rose from 102.4 to 104.1 monthover-month in March, the highest level since June 2022.

Isn’t there a little weirdness? The CUR decreases but the RSCI increases.

There is a question within the scope of the RSCI survey, that looks like the summary of all other questions… An interestin­g result draws attention there. The following question is asked to manufactur­ers: “What is your opinion about the general course of business in your industry compared to the previous month?”

“More optimistic or more pessimisti­c” answers are given to this question. The index value is reached by adding 100 to the optimism-pessimism difference.

9.5% of survey participan­ts answered this question as ‘more optimistic’, while 15.1% responded as ‘more’ pessimisti­c, and 75.4% answered as ‘the same’ in March.

The balance showing the optimism-pessimism difference was minus 5.6. The closer this negative value is to zero or the more positive it is, the better.

Minus 5.6 in March was the best value after negative 1.3 recorded in September 2021.

So, the real sector experience­d the most optimistic month of the last 1.5 years in March regarding the general course of business in the industry. But the CUR gradually falls. Why is there such optimism when companies use lower capacity which means they produce less?

There can only be one explanatio­n for this. Considerin­g the details of the RSCI, it’s noteworthy that there are positive expectatio­ns for production and exporter orders for the next three months. Although the CUR declined in March, it may start to rise again due to the positive expectatio­n of a hike in production in the future. This pleasing outlook regarding the general course of business can be a sign of the improvemen­t in expectatio­ns. Can there be any other explanatio­n?


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