Real people both complain and say that the situation is good!

✔ Real sector confidence index fell below 100 again after two years. There was a pandemic in 2020, what about now?

✔ It is an interesting contradiction that the real sector, which gave negative answers to almost all the questions that make up the index, found the general course positive.

The Central Bank has a survey study covering real sector institutions; economic orientation survey. The real sector confidence index is formed from this survey. The Central Bank explains the purpose of this study as follows:

“The purpose of the economic orientation survey is to produce indicators that will reflect the short-term trends of the manufacturing industry by monitoring the recent evaluations of business managers operating in the manufacturing industry, their views on the current situation and their expectations for the future.”

The real sector confidence index is formed by the arithmetic average of the answers given by the enterprises in the manufacturing industry to eight questions. Businesses are asked 22 questions every month, and additional questions are raised quarterly. All questions are grouped under eight headings. In other words, the index is formed by the answers given to these eight questions.

The Central Bank announced the results for September yesterday. It was observed that the real sector confidence index fell below 100 after a long period of time. The index for September was 99.9.

In the real sector confidence index, answers are given to questions such as “increased-decreased, will increase-decrease”. Positive and negative answers are summed, negative is deducted because it is negative, and the balance value is found by adding 100 to the result.

Let’s give an example:

The rate of those who say that the total amount of orders received in the last three months has increased is 20.2 percent, those who say it has remained the same, 54.4 percent, and those who say it has decreased, 25.4 percent. The difference between those who say it has increased and those who say it has decreased (20.2-25.4) minus 5.2. Here, minus 5.2 is added to 100 and the equilibrium value is found as 94.8.

The arithmetic average of the equilibrium value of the eight questions calculated in this way also gives the real sector confidence index.

Why did I need this long and technical explanation… To emphasize a contradiction…

Look at the questions I marked in yellow to emphasize the negative trend in the table! Responses to all of these questions point to a worsening compared to August. Since the stock decrease is marked in the opposite direction, this shows that there is actually a negative situation.

So much so that the real sector organizations stated that the situation is not good in every sense. It is stated that the situation is good for a single fixed capital investment expenditure.

The general condition is good!

But there is another more important question:

“What is your view on the course of your industry compared to a month ago?”

Now both the current order has decreased and the expectation for the next three months has turned to negative; Less production is expected in the next three months, there is also a decrease in employment.

In such a case, it is expected that the view on the general course of industry will be negative, right?

On the contrary, look what kind of picture the real sector institutions have drawn regarding the general trend…

The percentage of respondents who said they were more optimistic increased from 4.7 percent to 6.9 percent. 70.3 percent in August, 70.7 percent in September said the situation is the same. The rate of those who stated that they were more pessimistic decreased from 25 percent to 22.4 percent.

As a result, the general trend balance value increased from 79.7 to 84.5.

We look at the table; the top side is all negative, and the bottom side is only two pens positive. The last item is like the summary of the whole work.

Don’t you think there is something strange?

Or did the real sector representatives respond to this survey during a busy hour of their work?


Even if there is no internal consistency in the index, this is the material at hand! We have to use the results of the index, which has been applied for years.

The real sector confidence index fell below a critical threshold with 99.9. The index had last fallen below 100 in March, April, May and June of 2020. But those months had an excuse; Because of the pandemic, life almost stopped, not industrial production.

So what’s the reason now, why are the faces sad in the real sector?

Things are going badly, that’s a very concrete fact. The wheels in industry are turning more and more slowly. The data announced by TUIK show that the situation in industrial production is not good. Moreover, the production data announced are for July.

The real sector confidence index, on the other hand, is the leading indicator and signs about how industrial production will progress. Looking at the real sector confidence index, it would not be fortune-telling to say that industrial production will not do well, at least in August and September.