Romania’s Manufacturing Purchasing Managers' Index (PMI, chart), which measures the activity level of purchasing managers in the manufacturing sector, inched down in March to 46.9 points (3.1 points below the neutral 50-point benchmark) from 48.3 in February, marking the ninth consecutive month of contraction, according to BCR, part of Erste Bank, which compiles the index.

BCR analysts insist, however, that there has been an improvement in the external environment – pointing to Germany’s index that reached a 31-month high in March and also pointing to the significant fiscal stimulus adopted by Romania’s closest industrial partner.

Still, all components of the Romanian index deteriorated in March compared to February, when the index saw a faint improvement.

For the first time since the beginning of data collection, the suppliers' delivery times component rose (marginally) above the neutral level. But faster delivery times were linked to improved stock at suppliers, which might be the result of lingering subdued demand. 

On the upside, 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, BCR analysts argue. The HCOB Flash Germany Manufacturing PMI, correlated with Romania’s index due to the contractor position of a large number of Romanian manufacturing units, reached a 31-month high in March but remained negative at 48.3. 

Despite the figures showing a deterioration from February, BCR analysts, striving to remain positive, note that “last month brought a significant improvement for [the component] new orders”. It is hard to say where the “significant improvement” is, perhaps in the fact that the index was at markedly lower levels in some of the previous months.

March’s evolution could mean that there are still some lingering demand problems in the Romanian manufacturing sector, BCR analysts admit. New export orders also were lower in March vs February, indicating that demand from abroad remains a problem.