RO: BCR Romania Manufacturing PMI at 48.0 in November
November data shows a marginally worse situation across the Romanian manufacturing sector. The BCR Romania Manufacturing PMI came in at 48.0 vs 48.1 in the prior month. Low demand remains the ultimate problem local manufacturers face currently. New orders, output and stocks of purchases all had a negative directional contribution on the headline index this month, employment was neutral while suppliers delivery times cushioned some of the negative impact. The headline PMI reading continues to post below the 50-threshold showing a contraction vs the month before, November being the 5th consecutive month below this mark. The flash HCOB Germany Manufacturing PMI showed some improvement in November but remained well below 50. External demand remains crucial for any meaningful domestic manufacturing sector recovery.
Output Index came in lower in November compared to the previous month. Lower demand was reported as the main detriment. New orders and new export orders figures were lower this month. Considering that the new export orders index has been constantly below 50 since the beginning of data collection and with the index on a steady downward trend for the past three months, the problem becomes quite apparent. Even if internal demand had shown some positive momentum earlier in the year, external demand did not help at all. Managers remain optimistic, all things considered, banking on new product launches, investments in marketing and capital and increased online presence. It is noteworthy, that the index decreased slightly in November vs October but remained well above the neutral level.
The Employment Index improved slightly in November, but the figure remained contraction. This showed that marginally fewer respondents reported lower workforce numbers this month, but overall there was a contraction nonetheless. Lower demand continues to also force factories to reduce workforce numbers. Backlogs of work and stocks of finished goods more or less tell the same subdued demand story.
It is expected that 2024 will be the second consecutive year of contraction for Romanian manufacturing sector. PMI data for the first eleven months of the year confirms this scenario with an average index of 48.8. Next year a positive growth figure could be expected but will be highly dependent on how external demand will turn out. Romania also faces structural problems in the manufacturing sector as it is positioned quite low in the production value chain. Lower demand is most likely a mix of slower economic growth from abroad and a lack of high value-added products made by Romanian factories.