Turkey’s Construction Production Index Falls 3% YoY in May: Sectoral Breakdown

In May, the Turkish Statistical Institute reported that the construction production index fell 3% on a year‑on‑year basis.

Detailed Decline Overview

■May: Index dropped 3%, with a monthly decline of 0.4%.

■Building construction: Year‑on‑year 4.5% fall, monthly 0.1% drop.

■Private construction activities: Year‑on‑year 3.3% decline, monthly 1.4% drop.

■Non‑building structures: Year‑on‑year 6.2% rise, monthly 0.2% increase.

Sectoral Breakdown: Buildings vs. Non‑Buildings

■Building construction faced downturns due to cost hikes and limited labor supply.

■Private construction activities were impacted by the slowdown of urban renewal projects.

■Non‑building structures benefited from continued infrastructure investment.

Monthly Trends and Methodology Adjustments

■May’s 0.4% drop reversed the previous month’s 0.2% rise.

■Updated data collection methods increased the index’s sensitivity.

■Rising energy costs in the production process intensified cost pressures.

Outlook and Market Sentiment

■The construction slowdown could exert downward pressure on real‑estate prices.

■Financial institutions may reassess portfolio risks amid declining credit demand.

■This dip in macro‑economic indicators could send negative signals to the ISM index and consumer confidence.

Markets will likely react to this downturn by seeing price pressures rise in building materials and construction equipment sectors. Over the long term, increased infrastructure spending may mitigate the impact, but short‑term liquidity and credit growth in the sector could suffer.