Romania’s industry continues to fall, cuts jobs on weak external demand

Romania’s industrial companies continue to show signs of crisis and cut jobs as external demand declines, according to a fresh industrial barometer.

“Seasonality only partly explains poor activity. Many companies closed their gates in July for a full month of vacation. But the main cause of stagnation is the insufficient rate of internal and external orders,” the report says.

According to the report, stocks maintained flat and the indicator stood at 46 points in July, 4 point below the expansion threshold.

Worse, managers’ expectations have fallen steadily from one month to the next. The Synthetic Confidence Indicator dropped from 70 in January to 52 in July.

Managers expect layoffs as the labour force indicator in the sector maintained in negative territory (47, meaning contraction).

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The industrial production declined in the first six months of this year on limited output in the key-manufacturing sector.

The industrial production decreased by 0.6 percent year-on-year in January-June as the production in manufacturing, the largest sector of Romania’s industry, declined by 0.6 percent, mining and quarrying inched down by 0.4 percent, while energy output rose by 2.3 percent.

In June, the industrial output droped by 6.6 percent year-on-year, suggesting weaker demand and lower sentiment in the sector.

In 2018, Romania’s industrial production rose by 3.5 percent, a much lower rate that the official estimate of 4.5 percent.

The industry account for almost one quarter of Romania’s GDP and this poor performance has had an impact on the 2018 GDP value.

Romania’s GDP rose by 4.1 percent last year, a much lower rate than the government’s forecast.