Turkey construction industry shows fragile signs of life

Turkey’s construction industry is showing signs of a possible recovery, according to data from a sector association.

New construction orders rose 2.9 percent in August from July, the Association of Turkish Construction Material Producers (IMSAD), which represents the industry, said in a report on Wednesday. It was the second month of gains. An index of existing construction activity climbed 0.1 percent.

“Levels of new orders are still very low and indications are that the construction industry will contract again in the upcoming quarter,” IMSAD said.

Turkey’s construction industry is among the worst hit by a severe economic downturn sparked by a currency crisis last summer. Scores of companies have gone bust while others have been forced to seek bankruptcy protection, repay bank loans or restructure them as the housing market slumped and projects ground to a halt.

Non-performing loans in the Turkish banking industry rose to 297 billion liras ($52 billion) in the second quarter from 285 billion liras in the previous three months.

Growth in construction was a negative 12.7 percent in the second quarter, the fourth-straight quarter of declines and the deepest contraction in a year, according to IMSAD. Construction expenditure dropped 33 percent in real terms and permits fell 60 percent.

An index of confidence in the sector increased by 1.1 points in August after a rise of 0.8 percent in July, the association said.

House sales contracted 32 percent in July, IMSAD reported.