UPDATE 2-Turkish manufacturing confidence hits lowest since 2009

 (Recasts, adds  analyst comment)
    ISTANBUL, Sept 24 (Reuters) - Business confidence among
Turkish manufacturers tumbled to a nine-year low this month and
two other measures of economic health also declined, data showed
on Monday, reinforcing expectations of a downturn in the second
half of the year.
    Once seen as a star emerging market, Turkey has been rocked
by a sell-off in the lira, which has lost some 40 percent so far
this year, stoking inflation and raising concerns about a wave
of bad debts for banks.
    Business confidence among manufacturers slid 6.8 points to
89.6 points in September, central bank data showed, its lowest
since April 2009. The index had stood at 96.4 points in August.
    In other bad news for the Turkish authorities, a measure of
confidence in the construction sector dived 16.7 percent in
September, official data showed, as financial constraints and
slowing demand hit the industry.
    Manufacturing industry's capacity utilisation rate - a
measure of how much potential output is being used - fell to
76.2 percent, its lowest level in 2-1/2 years, from 77.8 percent
in August, central bank data also showed.             
    The central bank has responded to accelerating inflation
with a mammoth 6.25 percentage point hike in interest rates and
the government followed that with an economic plan designed to
restore market confidence. But investors have said the programme
is short on details and does not address issues at banks.
    "There's no sign that the rate hike will herald a broader
improvement in Turkish economic policymaking," economists at
Capital Economics said in a note to clients on Monday.
    "Meanwhile, the government's new economy programme proved
underwhelming. The latest data suggest that the economy has
entered a deep recession." 
    Other data released on Monday showed that costs in the
construction industry rose by nearly a third in July as
workforce and material costs weighed.
    Construction has been a pillar of economic growth in the
last 15 years under President Tayyip Erdogan. A self-described
"enemy of interest rates", Erdogan wants borrowing costs lowered
to boost the flow of cheaper credit to construction.
    Economists say the boom years focused more on consumption
than productivity - that Turkey built shopping malls when it
should have been investing more in factories.
    Turkey's annual economic growth slowed to 5.2 percent in the
second quarter and is expected to tumble in the second half.
    Turkey has said it will freeze new government infrastructure
projects to rein in spending.             

 (Reporting by Nevzat Devranoglu; Writing by Daren Butler and
Ezgi Erkoyun
Editing by David Dolan and Gareth Jones)