Turkish manufacturing contracts, hit by Iran war disruption, PMI shows

ISTANBUL, July 1 (Reuters) - Turkey's manufacturing sector contracted in June as the war in the Middle East disrupted demand ‌and supply, a business survey showed on Wednesday.

The Istanbul ‌Chamber of Industry's Turkey Manufacturing Purchasing Managers' Index, compiled by S&P Global, fell ​to 47.1 in June from 49.8 in May. The 50-mark separates growth from contraction.

Output returned to decline after rising slightly in May, with firms citing market uncertainty linked to the conflict in the Middle ‌East, softer new orders ⁠and higher prices.

Demand weakened further, with total new orders posting a solid decline and new export business ⁠also falling again after expanding in May.

Companies also cut purchasing activity, while employment continued to be scaled back. Suppliers' delivery times lengthened ​again, although ​the deterioration was the least ​marked since February.

There were some ‌signs of easing price pressures. Input cost inflation slowed for a second straight month to its weakest since November, while output price inflation eased to its lowest level so far this year.

The June survey reversed some of May's improvement and extended the sector's ‌downturn to 27 consecutive months. Firms ​also reduced stocks of purchases and finished ​goods amid muted demand ​conditions, the panel showed.

"The Turkish manufacturing sector took ‌a step back in June, posting ​a renewed softening ​of production amid muted new orders. Anecdotal evidence from the survey indicated that the war in the Middle East continued ​to be the ‌principal cause of the challenges facing firms," said Andrew ​Harker, economics director at S&P Global Market Intelligence.

(Reporting by ​Ezgi Erkoyun; Editing by Hugh Lawson)