Expectations Are Turning, Except in Construction — September 2026 Bulletin

İTOSAM — Weekly Economic Bulletin | 25 September 2026

Translation and analysis of the Istanbul Chamber of Commerce economic bulletin

İTO Center for Strategic Studies — period 21 to 25 September 2026

Covered: CEPR research on productivity and internal recruitment, business tendency statistics and the real sector confidence index, the consumer confidence index, sectoral confidence indices, financial services statistics and confidence, the capacity utilisation rate, and the export producer price index

This bulletin is built entirely from "soft" indicators — confidence, expectations and capacity. Unlike earlier bulletins, which carried hard production and sales data, what is measured here is economic actors' expectations of the future. And the overall message is clear: expectations are improving or stabilising in every sector, with one persistent exception — construction.

1. CEPR: Assessing in-house talent and firm productivity

"Productive firms turn more to their current employees to fill vacancies"

An analysis published on the VoxEU research platform, affiliated with the Centre for Economic Policy Research (CEPR), and based on Finnish data shows that companies with higher productivity assess their existing employees at a higher rate when filling vacancies. According to the research, more productive firms, when filling high-level positions, resort more to internal lateral moves and less to hiring from outside.

In a comparison the researchers made across different levels of productivity, in senior specialist positions the probability of an internal lateral move is about 6% higher and the probability of outside hiring about 8% lower. In lower-level specialist positions, the probability of promotion from within rises by about 17%, and outside hiring is seen less often.

According to the researchers, productive firms, probably because they know their current employees' skills better, are able to steer them to suitable tasks. This does not mean outside hiring is unnecessary; new employees can bring different skills, knowledge and ideas to the firm. Regular assessment of employees' competencies helps managers decide whether, for a given position, choosing a candidate from inside the organisation or from outside is more suitable.

Why this matters for a small or medium-sized company: the causality in this finding runs both ways — a productive firm hires from within, and hiring from within itself builds productivity (lower recruitment cost, a shorter learning curve, retained organisational knowledge). In a climate where the average profit margin of Turkish firms has reached 2.08% (18 September bulletin), the cost of one wrong senior hire can swallow several months of a business unit's profit.

Practical note: a simple list of each team member's actual skills — not the formal job description — before publishing any job advertisement is exactly what this research attributes to productive firms.

2. Business tendency statistics and the real sector confidence index — September 2026

"A limited rise in real sector confidence"

The seasonally adjusted real sector confidence index rose 0.1 points in September from the previous month, to 102.5. The unadjusted index, by contrast, slipped 0.8 points over the same period to 102.

Among the index's sub-components, the general course, the current level of total orders, total employment expectations for the next three months and total orders over the past three months pushed the index up. By contrast, expectations for export orders and production volume over the next three months, together with assessments of the current stock of finished goods and of fixed capital investment expenditure, weighed the index down.

A point worth underlining: firms' assessment of fixed capital investment expenditure was one of the factors pulling the index down. This is exactly what we also saw in the hard data: gross fixed capital formation grew only 0.6% in the second quarter of 2026, against 7.3% for the whole of 2025 (4 September bulletin).

In other words, not only the past data but also firms' future intentions show no investment. For construction, which is a direct output of fixed investment, this means the flow of new private projects will stay weak in the second half of the year as well.

The drop in export order expectations is likewise consistent with the 3.4 percent fall in exports in the second quarter and the collapse in exports' share of GDP (from 38.1% in 2022 to 24.7% in 2025).

3. Consumer confidence index — September 2026

The consumer confidence index rose 1.3% in September from the previous month, to 91.9. A look at the sub-indices shows that, except for the household's current financial situation, all of them pushed the index up.

The most important contradiction in this bulletin: the only sub-index that fell is "the household's current financial situation" (75.4 → 75.3) — and this is the very index that, at 75.3, sits deep below the 100 threshold. By contrast, "intention to buy durable goods over the next 12 months" jumped 3.6 percent to 108.8 — the only sub-index above the threshold.

The Turkish household is poorer today but intends to buy more. This pattern is usually not optimism; it is pre-emptive behaviour against inflation — "buy now, because tomorrow it will cost more". With 31.5 percent inflation and negative real returns on foreign currency and deposits, this behaviour is entirely rational.

Implication for sales: this is the same motive that brings the owner-occupier home buyer into the market — not the expectation of a capital gain, but an escape from the erosion of money. The sales message should be built on locking in the cost of housing, not on price growth.

4. Sectoral confidence indices — September 2026

Seasonally adjusted confidence indices took different paths across sectors in September. The retail trade confidence index rose 1.1% from the previous month to 111.3, the services confidence index was unchanged at 111.9, and the construction confidence index slipped 0.2% to 83.0.

In the sub-indices: in services, expected demand for services over the next three months fell 1.3% to 115.9. In retail trade, the expected volume of business and sales over the next three months rose 3.5% to 128.0. In construction, the current level of orders on the books rose 1.9% to 80.4.

Construction: orders are back, workers are not

The most important finding in this bulletin for your line of work. The analysis of the 28 August bulletin warned that the level of orders on the books had dropped from 82.1 to 78.9 and that "contractors' order books are emptying". This month, orders have come back to 80.4 — the first improvement after two months of decline.

But in the same table, the expected number of employees over the next three months fell from 87.3 to 85.5 (−2.1%). In other words, the same contradiction that persisted for months is now being resolved in the opposite direction: contractors see more work but do not intend to add staff — and this is fully consistent with the halving of construction employment growth (from 7.1% to 3.5% in the 18 September bulletin).

What it means in practice: the sector is rebuilding productivity — the same or more work with fewer people. That is good news for profit margins, not for the labour market. And the confidence index for the sector as a whole, at 83.0, is still the lowest in the economy and is edging back for the third month in a row (83.5 → 83.1 → 83.0).

Retail note: the sales expectation for the next three months, at 128.0, is the strongest forward-looking indicator in the whole bulletin and has risen two months in a row (119.1 → 123.6 → 128.0). At the same time the stock level fell 1.3%, which in TÜİK's methodology means an increase in stocks. High sales expectations with full warehouses — if the sales do not materialise, discounting pressure in the winter season is likely.

5. Financial services statistics and confidence index — September 2026

The financial services confidence index rose 8 points in September from the previous month, to 158.4. Among its sub-indices, all components — the business situation over the past three months, demand for services over the past three months and expected demand for services over the next three months — pushed the index up.

A full recovery: last month this index fell 4.6 points to 150.4; now it has recovered 8 points to 158.4 — higher than in either of the two previous months. Unlike last month, which showed a "bad past, better future" pattern, this month all three sub-components have turned positive.

The financial sector usually turns earlier than the real sector, because it sees demand for credit and transactions sooner. If this improvement continues for two more months, it is one of the signs confirming the bottom of the cycle — especially alongside the return of construction orders.

6. Capacity utilisation rate — September 2026

The seasonally adjusted capacity utilisation rate (KKO-MA) in manufacturing rose 0.6 points in September 2026 from the previous month, to 74.1%. Year on year, the rate is 0.3 points above its 73.8 percent level of September 2025. The unadjusted rate also rose 0.7 points, to 74.2.

Looking at monthly changes by goods group, the most marked increase was in capital goods and the most marked decrease in durable consumer goods. On an annual basis, utilisation rose 2.4 points in capital goods and 0.4 points in non-durable consumer goods, while it fell 3.9 points in durable consumer goods. Consumer goods and intermediate goods each saw a decline of 0.4 points.

Two economies in one table. Capital goods jumped 3.4 points in a month (69.7 → 73.1) and rose 2.4 points in a year. Over the same period, durable consumer goods plunged 3.9 points to 66.4% — the lowest in the table.

In other words, the factories that make machinery, equipment and capital goods are busier, and the factories that make fridges, furniture and cars are the emptiest. Investment demand is coming back, and household demand for durable goods is dying.

Together with 14 percent growth in infrastructure works (18 September bulletin) and the 13.8 percent drop in car sales (14 August bulletin), this forms a single, consistent story: money is going into capacity building and infrastructure, not into household consumption.

In September 2026, the highest capacity utilisation was in wood products, at 83.7%, and the tobacco (83.1%) and paper (83.0%) sectors also stood out with high levels. By contrast, leather had the lowest rate, at 59.8%, and machinery and equipment (63.2%) and other manufacturing (65.8%) were also among the relatively weak sectors.

For sourcing materials and equipment: wood products, at 83.7%, are running close to full capacity — at such a level, delivery times are longer and the buyer's bargaining power is weaker. Paper is in the same position. Machinery and equipment, by contrast, has a lot of spare capacity at 63.2% — for equipment orders and capital purchases, this is the best bargaining position in the table.

7. Export producer price index (YD-ÜFE) — August 2026

The export producer price index — which measures the change in prices of products made at home and sold abroad — rose 3.61% in August 2026 from the previous month and 32.60% from the same month a year earlier.

Among monthly changes by industrial sector, mining and quarrying rose 3.77% and manufacturing 3.61%. In the main industrial groupings, the increases recorded were 14.68% in energy, 4.38% in durable consumer goods, 2.82% in intermediate goods, 2.59% in capital goods and 2.22% in non-durable consumer goods. On an annual basis, mining and quarrying rose 43.41% and manufacturing 32.41%.

The shocking figure in this bulletin: energy +106.24% year on year. The export price of energy products has more than doubled in a year, and rose 14.68% in August alone. This is the fifth bulletin in a row in which energy has the highest price growth — for domestic producers too it was 6.99% month on month.

By contrast, capital goods rose only 20.59% year on year — about 11 points below consumer inflation. In other words, Turkey's exported machinery and equipment is becoming cheaper in real terms. The same point applies to buying equipment at home, and it points the same way as the 37 percent spare capacity in the machinery sector.

The price hierarchy is now clear: export prices (32.60%) are above consumer inflation (31.51%), and both are above domestic producer prices (27.95%). In other words, a producer that exports has better pricing power than one that sells in the domestic market — a difference of about 4.7 points a year. This is a point to factor into the assessment of any manufacturing partnership or industrial investment.

8. Analytical summary

a) Expectations are turning — except in construction

Five of this bulletin's six confidence indices improved or held steady: financial services (+8 points), consumer (+1.3%), retail trade (+1.1%), the real sector (+0.1 points) and services (unchanged). Only construction fell, by 0.2% to 83.0 — a third straight month of slow decline and the lowest index in the whole economy.

b) Contractors' order books have opened, but hiring has not

Orders on the books recovered from 78.9 to 80.4 (+1.9%), while the expected number of employees fell from 87.3 to 85.5 (−2.1%). This combination means a rebuilding of productivity: more work with the same number of people or fewer. It is positive for profit margins, negative for employment.

c) Investment up, durable consumption down

Capacity utilisation in capital goods jumped 3.4 points in a month to 73.1%, while durable consumer goods plunged 3.9 points year on year to 66.4%. Money is going into capacity building and infrastructure, not into household consumption.

d) Households poorer, but more determined to buy

The only consumer confidence sub-index to fall was "current financial situation" (75.3), while "intention to buy durable goods" jumped 3.6% to 108.8. This is pre-emptive behaviour against inflation, not optimism — and it is the same force that brings the owner-occupier home buyer into the market.

e) Practical implications for PERGAS

• For project management: returning orders combined with weaker hiring intentions mean contractors will have more limited execution capacity in the coming months. Locking in the site team and subcontractors early for autumn projects is cheaper today than it will be two months from now.

• For equipment purchases: the machinery and equipment sector, at 63.2% utilisation, has the most spare capacity and the best bargaining position; the export price of this group has also risen only 20.6% a year — 11 points below inflation.

• For sourcing materials: wood products (83.7%) and paper (83.0%) are running close to full capacity — expect longer deliveries and tougher bargaining. Ordering early is necessary.

• For the home sales message: today's buyer is motivated by preserving value against inflation, not by the expectation of a capital gain (real house prices are down 6.5%). The message should be built on locking in the cost of housing and on rental income.

• For hiring: the CEPR finding — internal promotion 17% more likely at productive firms — is, in a 2 percent profit-margin environment, a practical management principle, not an academic point.

• What to watch: if construction orders rise again next month and financial services confidence stays above 158, we will have two independent confirmations of the bottom of the cycle.

This document is a translation and analysis of the weekly economic bulletin of the İTO Center for Strategic Studies (İTOSAM) dated 25 September 2026. Data is drawn from the sources cited in the bulletin (CEPR/VoxEU, TÜİK and TCMB). The sections headed "Note", "Warning", "Reading", "Implications" and "Summary" are added commentary and are not part of the original bulletin text. Comparisons with 31.51 percent consumer inflation and references to earlier months' data are based on the bulletins of 7 August, 14 August, 28 August, 4 September and 18 September 2026. In the Persian edition, months are given with Persian names for readability: Mordad ≈ August, Shahrivar ≈ September.