RO: Annual industrial growth hits three-year high

Industrial production dropped -0.6% m/m in May but increased by +3.7% y/y helped by a base effect. Actual data came in line with our expectations of +3.6% y/y.

We estimate industrial production growth at -0.4% in 2025. Local and external confidence indicators are gradually improving, but meaningful recovery for manufacturing is postponed for next year.

Mining increased +2.9% m/m and +0.5% y/y, manufacturing dropped -1.3% m/m and was up +4.1% y/y, while energy production was strong at +3.6% m/m and +7.0% y/y.

Manufacturing growth over the past twelve months remains 5.6% below pre-Covid level, pointing towards competitiveness issues of local industry.

BCR Romania Manufacturing PMI rose in June to a one-year-high, while remaining below 50 which still indicates contraction. New orders and output had a negative contribution to the index, while employment, stocks of purchases and suppliers delivery times lifted the headline figure.

Manufacturing confidence increased in June according to the Economic Sentiment Indicator on higher production expectations.

Manufacturing component of the Ifo Business Climate Index for Germany improved marginally in June. Companies were noticeably more optimistic about the coming months, but current business performance has been less favourable.

In June, HCOB Eurozone Manufacturing PMI climbed to the highest level since August 2022. European manufacturing sector showed resilience in front of shocks like US tariffs, the crisis in the Middle East, and Russia's ongoing war against Ukraine.