RO: BCR Romania Manufacturing PMI at 46.9 in March
The BCR Romania Manufacturing PMI inched down in March to 46.9 from 48.3 in the previous month. This marks the 9th consecutive month of contraction in Romanian manufacturing based on PMI survey responses. All components had a negative directional contribution this month. For the first time since the beginning of data collection, the suppliers' delivery times component rose above the neutral level. Faster delivery times were linked to improved stock at suppliers, which might be the result of lingering subdued demand. The HCOB Flash Germany Manufacturing PMI reached a 31-month high in March but remained contractionary at 48.3. The external environment is becoming more growth supportive for Romanian manufacturing and the newly adopted fiscal stimulus in Germany should be good news for the sector.
The average PMI over the first quarter is indicating that industrial output could register a sequential contraction. Official data from the National Institute of Statistics shows that January industrial output was up 2.1% in both monthly and annual terms. This was a surprisingly strong evolution, but based on PMI figures, subsequent data for the quarter could drag the average growth rate down. The expectations continue to be that industrial output will regain its growth momentum in 2025, after two consecutive years of contraction. External demand should play an important role. Significant investments in EU security, along with large fiscal stimulus approved in Germany for infrastructure and defence spending, are likely to boost European industrial production. The uncertainty remains high, especially in the context of the announced U.S. tariffs on autos. Romania is mostly indirectly exposed through German car industry supply chain.
New orders remained contractionary in March, stretching the streak to 9 months. Even though the figure was still contractionary, last month brought a significant improvement for new orders. Marchs evolution could mean that there are still some lingering demand problems in the Romanian manufacturing sector. New export orders came also lower in March vs February indicating that demand from abroad remains a problem. Challenging economic conditions and subdued demand continue to affect output, which has been contracting for the past 10 months based on PMI data. Employment, backlogs of work and stocks of finished goods also continue to suffer the consequences of low demand. Nevertheless, business expectations remain high and are now back above the historical average. Respondents remain optimistic regarding an eventual improvement of the economic conditions and dividends from past investments in advertising and production capacity.
Input prices continued to rise in March. Respondents cited increased supplier prices and, to a lesser extent, higher wage burdens. Some of the burden was also passed through the output prices which were also on the rise this month. The growth rate was softer for both input and output prices in March vs the previous month.