UPDATE - Turkey's industrial output surges in October

ADDS ANALYST COMMENTS

ANKARA (AA) - Turkey's calendar-adjusted industrial production soared by 2 percent in October, beating estimates by a wide margin from a year earlier, the Turkish Statistical Institute (TurkStat) said in a statement Thursday.

The term “calendar adjusted” is used to refer to unadjusted data that has removed calendar and holiday-originated effects.

On an annual basis among the sub-indexes, the electricity, gas, steam and air conditioning sector led the advance with a 5.7 percent increase. It was followed by the manufacturing index with 1.7 percent and the mining and quarrying index, which saw a 0.4 percent increase, the statement said.

The 2.1 percent advance was a positive surprise for authorities and markets since surveys had showed weaker forecasts for industrial output in October.

According to a survey held by Anadolu Agency’s Finance Desk on Monday, the median estimate for annual industrial production was 0.8 percent.

"After a weak growth outlook observed in the third quarter, we saw considerably positive data in the first month of the last quarter, which is also in line with the Manufacturing Purchasing Manager Index of October,” said Enver Erkan, analyst from the KapitalFX investment firm said.

However, Erkan pointed out that the weak growth performance in the third quarter is expected to weigh on year-end growth figures.

“In light of leading indicators, it wouldn’t be a surprise to see a third quarter growth below zero. On the other hand, we don’t expect a contraction in the fourth quarter. Despite the fact that we had balanced growth expectations, we do not forecast a very strong growth in the fourth quarter” Erkan said.

Among the sub-indexes, the manufacturing index led the advance with a 4.1 percent increase on a month-on-month basis. The electricity, gas, steam and air conditioning index was estimated to see an advance of 2.9 percent, and the mining and quarrying index, 0.6 percent.

Turkey's industrial output is deemed as a vital indicator for economy as it is seen as a preliminary gouge for Gross Domestic Products (GDP) growth of the country, which officials have repeatedly highlighted must be over 5 percent.