RO: BCR Romania Manufacturing PMI at 46.1 in January
The BCR Romania Manufacturing PMI dropped to a new record low at the start of 2025. The headline index came in at 46.1 in January, down from 46.4 in the previous month. A softer increase in suppliers delivery times was a key directional driver in January in the context of an eased rate of contraction of new orders compared to the previous month and an almost unchanged Output Index. Production volumes declined at the quickest rate on record showing that the manufacturing sector remains in distress. Though still in contraction, the HCOB Flash Germany Manufacturing PMI showed some improvement in January and came in at an 8-month high, which is a good sign for Romanian producers as well. In general, external demand is expected to be moderately better this year which should boost export orders.
We do not yet have the full official data for 2024 but based on data up to November we can conclude that manufacturing output ended the second consecutive year of contraction. GDP growth is expected to slightly accelerate in Romania in 2025 and provided that external demand is somewhat supportive, this year should break the streak and manufacturing output is likely end up in green territory. However, structural issues continue to be an important factor for Romanian manufactured goods which might ultimately lead to a slower recovery.
Low demand and a challenging economic climate continue to negatively affect output. The current contraction trend of the Output Index has now been happening for eight months. Weak new orders remain linked to budgetary constraints of customers. Both the new orders and new export orders readings came higher in January vs December albeit remining below the 50 neutral mark. We might be witnessing some early signs of bottoming out, but it is premature to tell. Employment also continues to suffer the effects of subdued demand. An eighth consecutive monthly decrease in workforce numbers was recorded in January. Business expectations improved in January and firms remain optimistic despite the challenging period.
Input prices remained on the rise in the first month of 2025. Cost pressures were strong but subdued by historical standards. Increased fuel and electricity costs and higher suppliers prices were the main reasons mentioned by the survey respondents for this evolution. Output prices rose significantly in January sequentially speaking. Factory gate prices have been rising for 15 months. Output prices were raised to cover increased salaries, higher taxes, and material costs.