The PMI index, which assesses the state of the manufacturing industry in accordance with Standard &Poor’s standards, is a composite single-figure indicator of manufacturing performance, derived from new orders, output, employment, suppliers’ delivery times, and stocks of purchases.
The 50-point mark separates growth from contraction.
“The index moved further below the neutral 50 mark, indicating an accelerated contraction in manufacturing conditions. The last time the PMI exceeded 50 was in May 2024,” Erste Group [BSE:EBS] said in a press statement. “Weakness momentum was primarily driven by output and new orders, while other components posed broadly neutral or slightly positive directional influences. Both input and output prices growth pace continued to cool, reflecting some relief in the cost pressures.”
The PMI is a weighted average of several indices related to the manufacturing industry in Romania. These indices include new orders, output, employment, suppliers’ delivery times, and stocks of purchases.
The output index declined at an accelerating rate in November due to subdued demand amid constrained customer budgets, with some firms alarmingly reporting complete production stoppages, the banking group said. Both total new orders and new export orders fell at faster rates than in the previous month, with cost pressures cited as the primary cause. November brought the sharpest contraction in total new orders since the start of the year, while persistent challenges in international trade relationships kept export orders on a downward trajectory.
“Although the Future Output Index remained in positive territory, it dropped to a new survey low, reflecting growing concerns among panelists that economic conditions could deteriorate further,” Erste noted.
The country’s manufacturing industry is heavily reliant on external demand and is positioned quite low in the production value chain, showing a lack of high value-added products made by Romanian factories.
“Overall, demand remains weak in Romania’s manufacturing sector, and any potential recovery may hinge on external markets. However, prospects there also appear challenging: the HCOB [Hamburg Commercial Bank] Flash Germany Manufacturing PMI fell to a six-month low of 48.4 in November, suggesting that external demand will likely remain a headwind for Romanian manufacturers in the near term,” Erste stated.
Romania’s manufacturing PMI is released on the first working day of each month and is compiled by S&P Global, which started sending out questionnaires to purchasing managers of about 400 manufacturers in July 2023. Banca Comerciala Romana (BCR), the Romanian unit of Erste, launched the PMI in early 2024.