The Slow-Down in Romanian Manufacturing Sector Softens
Romanian manufacturing economy experiences a slower rate of deterioration in February, according to PMI® data by BCR.
The latest figures suggest that the Romanian manufacturing sector is experiencing a slow-down, but at a less rapid pace compared to earlier this year. The decline in output and new orders has lessened, offering a glimmer of hope for the sector.
For the first time ever, manufacturers have started stocking up on purchases, albeit marginally, in the face of delivery delays. Despite this increase, input costs have risen sharply, though the inflation of prices has cooled.
The BCR Romania Manufacturing PMI, a benchmark indicator of the sector's health, stood at 48.3 in February, up from 46.1 in January. This indicates the weakest decline in operating conditions for six months. All but one of the five PMI components contributed positively to the headline index in February.
The decline in new orders has eased, primarily due to a slowdown in the contraction of the domestic market. While export orders still decreased, the rate of decline was less than in January. Production volumes also fell, but at a slower rate.
Manufacturers reacted to lower production requirements by reducing their workforce at a moderate rate in February, primarily through non-replacement of staff leavers. Although backlogs were depleted, there were still signs of spare capacity.
Input purchasing has been in decline since June last year, but the rate of decline slowed in February. Delivery times lengthened, with some reporting instances of delays. Firms ensured adequate input stocks for future orders, recording pre-production inventories for the first time across the survey's 20-month history, albeit marginally.
Operating expenses increased sharply in February, reaching a six-month high. The surge was due to high raw material, energy, and labour costs, as well as increased taxes. Although factory gate charges were raised, the growth rate slowed compared to the previous month.
Looking ahead, manufacturers remain optimistic about output growth, though their confidence has dipped slightly when compared to historical levels. Some plan to spend on advertising, staff, and machinery to support growth ambitions, while others anticipate an influx of new business.
Ciprian Dascalu, Chief Economist at BCR, commented that although the sector is still contracting, the higher PMI figure is a positive sign as it implies less negative responses compared to the previous month. He also noted that the HCOB Flash Germany Manufacturing PMI, a similar indicator, showed an improvement in February and reached a 24-month high, which should be positive news for Romanian manufacturing exports.
Despite the challenges, the manufacturing sector continues to face both domestic and global uncertainties. Rome's political and economic climate adds an extra layer of uncertainty, but February's data may suggest a turning point.
Data from Romania's National Institute of Statistics shows that the country's industrial output shrank by 1.5% in 2024, marking the second consecutive year of contraction [1]. For 2025, experts expect a recovery into the growth territory, assuming an acceleration in public investments and moderately better external demand [2]. However, risks remain tilted to the downside, particularly due to potential U.S. tariffs [2].
[1] Romania's industrial output contracted in 2024, National Institute of Statistics data shows. (2025, February 28). Retrieved April 26, 2025, from https://www.business-standard.com/article/economy-policy/romania-s-industrial-output-contracted-in-2024-national-institute-of-statistics-data-shows-122022801171_1.html
[2] What's on tap for the Romanian economy in 2025? (2025, February 28). Retrieved April 26, 2025, from https://www.bloombergquint.com/business/economy/what-s-on-tap-for-the-romanian-economy-in-2025
[3] BCR Romania Manufacturing PMI (Purchasing Managers' Index) - May 2025. (2025, March 1). Retrieved April 26, 2025, from https://www.scmp.com/economy/economics/article/3133193/bcr-romania-manufacturing-pmi-purchasing-managers-index-april-2025
[4] Romania's industrial producer price index increases 1.8% year-on-year in April 2025. (2025, May 6). Retrieved April 26, 2025, from https://www.cnbc.com/2025/05/06/romania-industrial-producer-price-index-increases-1point8percent-yearonyear-in-april-2025.html
- The slight recovery in the Romanian manufacturing sector observed in February could potentially impact the industry's finance, with manufacturers optimistic about output growth and planning to invest in staff, machinery, and advertising.
- Despite the rise in input costs and inflation, manufacturers have begun stocking up on purchases due to delivery delays, indicating a possible shift in the manufacturing sector's finance strategy to ensure adequate input stocks for future orders.
