Turkey's business optimism shows varying levels in July, with the construction sector experiencing an upward trend
The latest data and analysis from the Turkish Statistical Institute (TurkStat) and other relevant sources offer insights into the current trends and factors affecting Turkey's construction, services, and retail sectors.
Construction Sector
The construction sector in Turkey is currently experiencing a surge in employment expectations, with a 4.9% increase forecasted for the next three months. However, this growth is tempered by a predicted 1.1% drop in sales for the same period. The sector is also grappling with rising labor costs, as the construction labor cost index has seen a steady increase from 2015, accelerating significantly from 2022, reaching a peak index value of over 1,758.6 points by July 2024 [2].
Turkey's construction industry is renowned for its large number of firms with significant experience in international projects. In 2016, 39 Turkish firms were ranked among the Top 250 International Contractors by Engineering News-Record. By the end of 2022, Turkish contractors completed more than 11,600 projects worldwide, with a business volume abroad hitting $472 billion [3].
Domestic challenges include the demand for urban redevelopment and reconstruction projects, especially after the devastating earthquakes in February 2023. These events have exposed deficiencies in compliance with safety regulations in some recent buildings, emphasizing concerns about construction quality and regulatory enforcement [3].
Services Sector
While specific trends in the services sector from TurkStat were not provided, general economic conditions such as consumer confidence indices, inflation, and labor cost dynamics influence service industries broadly. The Consumer Confidence Index data from June 2025 indicate market sentiment trends which indirectly affect services [4].
Growth in renewable energy, such as solar power reaching 22.6 GW by mid-2025, signals expanding investment and services opportunities in the green energy sector, which is part of the broader services ecosystem supporting this industry [1].
Retail Sector
Increases in construction permits for retail buildings suggest activity and investment in retail infrastructure. Rising labor costs and general inflationary pressures likely affect retail operational costs, pricing strategies, and consumer purchasing power, shaping sector dynamics [2].
Additional Context
Turkey's wider economic environment reflects an emerging free-market economy ranked 16th globally by nominal GDP in 2025, with ongoing infrastructure and urban development projects shaping construction and retail sectors [3]. Energy sector growth, particularly in solar capacity, reflects a structural shift towards renewables, impacting construction (solar plant installations) and services sectors (operation, maintenance, financing) [1].
In summary, rising labor costs and safety/regulatory challenges strongly influence the construction sector, while economic sentiment and energy transition trends shape services and retail sectors. These insights are anchored in TurkStat data and supplemented by sectoral analyses from Turkish economic reports and related sources [1][2][3][4].
Additional data points include: - The services sector confidence index for July declined by 0.8%. - Current inventory levels in the construction sector have risen 1%. - Demand for services over the past three months in July decreased by 1%. - The construction sector shows resilience in the face of order challenges. - The retail trade confidence dropped by 0.5% in July. - Despite a 0.7% decrease, the current level of registered orders received in the construction sector. - The expected demand for services over the next three months in July also decreased by 1%. - The retail trade and services sector confidence indices for the next three months are not mentioned. - The demand for services over the past three months in the construction sector is not mentioned.
- Istanbul's flourishing construction industry, backed by the numerous Turkish firms with international experience, has completed over 11,600 projects worldwide, amassing a business volume of $472 billion by the end of 2022 [3].
- The financial sector in Turkiye, influenced by economic factors like consumer confidence indices, inflation, and labor costs, poses challenges for businesses, particularly within the service sectors [4].
- In Turkiye, the retail sector is witnessing increased activity and investment, as shown by the growth in retail building permits. Yet, factors like rising labor costs and inflationary pressures may impact retail operational costs, pricing strategies, and consumer purchasing power [2].
