BCR Romania PMI Analysis for August

Romania’s manufacturing industry shrank ‌again in August as companies continued to face weak demand.

Main Findings

• Smaller reductions in production and new orders
• The biggest drop⁢ in factor ⁣purchases since data collection began
• Cost pressures are easing, but inflation is rising again

Although there have been⁣ continued declines ‍in production and new orders,‍ the rates of ‌decline have narrowed.

Buying activity fell at the fastest pace on record. As a ⁤result, cost pressures have eased ⁤slightly, but remain high. Sales prices rose at the fastest ‌pace since February.

PMI⁣ Index

The PMI index for the manufacturing industry ​in Romania, presented by BCR, is a composite ⁣indicator of the performance of the manufacturing industry, consisting⁤ of ‌a single figure and derived from ⁢indicators on new orders, production, ​employment, supplier delivery times and⁢ inventories of purchases.

A PMI index above the 50.0⁣ point threshold without changes shows an improvement in the industry situation ​in that month, while a figure below the 50.0 point threshold shows a deterioration.

The PMI increased from 47.8 points in ​July to 48.4 points in August. The latest level signals a‍ continued but milder slowdown in economic ⁢growth.

Key ⁢Drivers of the Deterioration

The largest sub-component – new orders – remained the key driver of the overall deterioration in the sector’s position, falling for the second consecutive month in August.

Export performance was weak again in August, although the pace of contraction in international ⁢orders‍ was the ⁢second⁤ slowest on record.

Production ‌and Employment

Mainly as a result of lower sales, Romanian producers reduced ⁣their production volumes for⁣ the third month in August.

Some companies⁤ were facing ‍personnel problems.

The factory workforce fell again midway through ⁣the third quarter, marking ⁣three straight months of modest job losses.

Prices and Inflation

As a result, factor prices rose sharply in August, with ⁣companies seeing ‍increases in raw material, ‍fuel and labor costs.

However, Romanian commodity producers ​tried to pass on part of the cost burden to customers, raising prices.

Comment

Ciprian Dascălu, chief economist at BCR,⁣ said:

“The ⁣second consecutive month of decline in the ‍Romanian manufacturing industry⁣ in‌ August, the BCR PMI index on the Romanian manufacturing industry was​ at a value of 48.4.

According to the answers ⁢given by the survey participants, economic activity in the Romanian manufacturing industry decreased in August compared to the previous month.

With PMI data ‌for more than half of the year, it is safe to say that the outlook for the manufacturing industry does not look good,⁤ and the ⁢INS data relating to the production ⁢of this sector for the first six months the year, ‌leads us to ⁣believe that this branch‍ of the ‍industry will ​end the year with almost zero growth.

The still weak demand, as suggested by the second ⁤consecutive month⁢ of‍ decline in ‍the new orders component of the BCR PMI, can be attributed⁣ to⁣ both domestic ​and external factors.

On a more positive note,‌ the expectations of companies taking part ​in the PMI survey regarding future developments in demand and the general business‌ environment ​were‍ rising.

Most⁢ respondents became more optimistic about future production.

Their optimism comes particularly from the planned marketing campaigns, which they hope will increase sales.