RO: BCR Romania Manufacturing PMI at 48.1 in October
October brought the fourth consecutive BCR Romania Manufacturing PMI reading below the 50 no-change mark which indicates a contraction compared to the month before. The figure came at 48.1 which is higher than the 47.3 in the prior month. This shows that not as many survey respondents declared worsening conditions in October vs September which can be seen as an improvement. From this perspective, all components except suppliers delivery times had a positive directional contribution this month. Employment followed by new orders had the most notable positive contributions. The flash data for the HCOB Germany Manufacturing PMI showed some improvement in October with a value of 42.6, up from 40.6 in the September. However, perspectives remain bleak for the German economy this year which is affecting the external demand for Romanian manufacturing.
According to PMI data so far this year we should likely get the second consecutive year of contraction in Romanian manufacturing. The average PMI for Q3 2024 stands lower vs the previous one which is a bad sign for economic growth. The domestic manufacturing sector remains quite heavily reliant on external demand. The overall story of the BCR Romanian manufacturing PMI remains quite bleak looking at the underlying data. Weak demand numbers, especially from abroad, continue to limit any momentum gain in manufacturing output and this is reflected in pretty much all measured components.
New Orders Index showed some improvement this month, but the value remained contractionary and below its long-term average. The New Export Orders Index, on the other hand, reached the lowest value for eight months. External demand seems to have not helped at all this year and most likely this will be the make-or-break factor for Romanian manufacturing next year as well. Lower order numbers continue to take a toll on output. The rate of decrease has moderated a bit in October. Increased spending in advertising and hopes of new customers acquisitions are keeping the morale high for Romanian manufacturers.
The Employment Index remained in the red for the fifth consecutive month. Lower demand continues to affect the need for factory workers. The bright side is that this rate of contraction was only marginal, and the index value was considerably higher compared to the previous month. Backlogs of work came in lower in October and stock of finished goods went down. Purchasing quantities inched down and stocks of raw materials and semi-finished items were reported lower. This is also mainly a result of lower order numbers.
As has been the case since the publication of the PMI index, input prices went up and with a higher degree compared to output prices in October. Higher raw material prices and wage costs drove up input prices as reported by the panelists. This in turn put upward pressure on the selling prices, which were hiked at the sharpest rate since February.