RO: Bumpy recovery for industry
Industrial production partially reversed previous months weakness when it dropped -6.2% m/m and increased by +4.0% m/m in June, pushing the annual reading back into positive territory at +0.5% y/y. Actual data came above our forecast of +0.5% m/m and -3.0% y/y, which was similar to Bloomberg survey median. Seasonally and working days adjusted series continues to exhibit high monthly volatility.
Industrial production could turn positive in 2024 after a contraction of -2.5% in 2023. Domestic and external confidence indicators for manufacturing were weak in July, suggesting a difficult recovery for industrial production. On a positive note, German industrial production rose above expectations in June and factory orders came in strong.
Manufacturing grew +5.1% m/m and +1.3% y/y, mining dropped -1.5% m/m and -2.7% y/y, while energy production was up +5.4% m/m but declined by -5.4% y/y in June.
Quarterly data shows industrial production at -1.1% q/q and -1.1% y/y in 2Q24 vs +1.1% q/q and -0.8% y/y in 1Q24.
BCR Romania Manufacturing PMI dropped to 47.8 in July after three consecutive months at or above 50 no-change mark. The decline was broad-based, with all five components having a negative directional contribution.
Manufacturing confidence was roughly unchanged in July vs June according to the Economic Sentiment Indicator (ESI) as local managers reported weaker order books along with better production expectations. Quarterly ESI survey shows capacity utilization in manufacturing at 68.0% in 3Q24 vs 67.8% in 2Q24 and below the long-term average of 77.0%. New orders in manufacturing are seen broadly unchanged by managers in 3Q24 vs 2Q24.
Manufacturing component of the Ifo Business Climate Index for Germany fell in July. HCOB Eurozone Manufacturing PMI remained in contractionary territory in July, with particularly low figures for Germany and France.