BCR Romania Manufacturing PMI: Romanian manufacturing sector stagnates as PMI posts at 50.0 mark
Fresh decrease in factory production volumes in June - Sustained rise in total new orders, while exports fall again - Cost pressures intensify, despite a renewed drop in input buying
- Fresh decrease in factory production volumes in June
- Sustained rise in total new orders, while exports fall again
- Cost pressures intensify, despite a renewed drop in input buying
Though the headline BCR PMI® signalled no change in the health of the Romanian manufacturing economy, more granular data provided further insights into operating conditions. Overall, demand for Romanian manufactured goods strengthened, albeit at a modest rate and delivery times lengthened (a sign of capacity pressure at suppliers).
Meanwhile, output levels were down for the first time in three months and employment also decreased. Firms looked to protect cashflow by reducing purchasing quantities and subsequently lowering stocks to reduce warehousing costs. The latest data also revealed a sharper rise in input costs.
The headline BCR Romania Manufacturing PMI® is a composite single-figure indicator of manufacturing performance derived from indicators for new orders, output, employment, suppliers’ delivery times and stocks of purchases.
A PMI reading above the 50.0 no-change mark signals an improvement in the health of the sector over the month, while a figure below 50.0 points to a deterioration.
June saw a drop in the headline PMI index from 52.0 in May to 50.0 in June. Posting at the 50.0 stabilisation mark indicates no change in overall operating conditions across the Romanian manufacturing sector at the end of the quarter. The outcome was a result of mixed trends across the five PMI components.
New orders remained on a growth footing in June amid reports of new client wins and improved demand conditions. That said, the rate of increase was only modest and softer than in May.
As has been the case in each month for the past year, new export orders fell again and at an accelerated pace in June, providing signs that domestic demand is propping up total orders.
Meanwhile, Romanian manufacturers signalled a renewed decrease in production volumes in June, following a brief two-month period of expansion. Increasing cost pressures and softer new orders were among the drivers mentioned in anecdotal evidence.
June survey data highlighted elevated input price inflation, reflecting greater utility, raw material and energy costs. In fact, the proportion of manufacturers registering cost hikes outweighed those experiencing a decline by about four-fold. Despite growing cost pressure, output charges were raised only marginally and at a rate largely consistent with May.
Firms also protected cashflow by reducing input buying and their stocks of purchases, both of which were cut in line with lower production requirements. Meanwhile, quantities of purchases decreased in June after just one month of growth.
