Romania’s manufacturing sector remained under pressure in February, according to the latest PMI results for Romania published on Friday by S&P and BCR.

Such indices are also calculated for the Czech Republic and Poland, as well as in Hungary (where they are based on a different methodology).

Romania’s manufacturing PMI fell from 47.6 to 47.1 in February, the lowest level in months, February being the eighth month of decline.

Poland’s PMI rose to 47.9 in February from 47.1 in January, a surprise increase, while the Czech Republic’s PMI rose to 44.3 in February, a big positive surprise. In Hungary, the index rose to 52.2 in February.

The recovery of the manufacturing sector in Romania will take more time and is unlikely to happen in the first half of the current year

Romania’s manufacturing sector remains mired in recession, with further shocks from supply chain bottlenecks and higher taxes weighing on activity amid already generally weak demand.

The main component of the PMI index – new orders – fell at an accelerated pace in February, indicating weak demand for Romanian manufactured goods. In response to the drop in demand, firms reduced production volumes and resource purchases. At the same time, costs increased due to increased tax burdens and higher raw material prices, which forced firms to raise their selling prices.

Ciprian Dascalu, BCR Chief Economist, noted: “The BCR Romania manufacturing PMI declined in February, a change in line with a brisk PMI in Germany, Romania’s main trading partner, which accounts for more than 23% of Romania’s total manufacturing exports.

“Romania’s manufacturing sector remains in recession, with further shocks from supply chain bottlenecks and tax hikes amid a significant drop in demand. We recently revised our GDP growth forecast for this year to 2.6% year-on-year from 3.3% after disappointing growth in the last quarter of 2023. We expect household consumption to be the main driver of GDP growth in 2024, followed by public investment, while private investment is likely to be delayed due to an uncertain fiscal outlook,” says Ciprian Daskalou, BCR Chief Economist.

The BCR Romania Manufacturing PMI® is an indicator that takes into account new orders, production, employment, supplier lead times and inventories. When the index crosses the 50 mark, it means an improvement in the economic situation. When its value is less than 50, it means a worsening of the economic situation.