Romanian industry, slight recover, yet many concerns ahead, Industry Barometer says

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Romania’s industry has partially came out of depression in September 2019, but the impact of the industrial activity on inflation and on the labour market is still negative, reveals the Romanian Industry Barometer released on Thursday.

Moreover, the state of mind among companies is still low, although managers seem to be a little more optimistic in September compared to the previous month.

The barometer reads that the comeback was due to domestic demand rather than export orders, considering the slight decline of exports, most probably due to a slowdown in manufacturing in Germany and other Western countries.

In terms of production, the survey reveals that its volume came out of contraction and increased to 58 points in the growth area. This level had not been reached since May. Stocks have been slightly up to 47 points, but for several years they had been almost constantly in contraction.

New orders also recovered, with the indicator up from 45 in August to 58 in September. Growth is mainly endorsed by domestic demand, which probably intensified as summer holidays ended. Instead, export orders were lagging. In August, they were contracting to 43 points and in September they increased only to 50. However, imports of raw materials increased more vigorously, from 49 in August to 56 in September.

The number of employees continued to remain contracted at 48 points compared with 44 in August. In the last 12 months, the average employment indicator has fluctuated around 47 points, meaning that the industry did not create new jobs last year.

On the other hand, production costs remain high. In September, the indicator was at 66 points in the expansion area, as in August. The high costs partly explain the low rate of labour supply in the industry and could be related to keeping inflation above the desirable level.

Prices charged by companies for their products have slightly decreased from August, from 55 to 52, most probably due tot the exports’ decline, where prices are higher, and the share of domestic orders increased, where prices are lower.

“The overall indicator of managers’ confidence improved slightly, rising to 58 points from 55 in August, probably amid the confirmation of adaptive expectations, in the sense that the managers expected the activity to increase at the end of the holiday season in September. Confirmation of the short-term expectations produces an increase of confidence in the long-term developments,” according to the findings.

The Romanian Industry Barometer survey is conducted by IRSOP and the Management Faculty of the National School of Political and Administrative Studies (SNSPA), on a sample of 300 industrial companies representative for the 15,200 industrial companies with over nine employees operating in Romania that generate about 95 percent of the total industrial turnover. It is a monthly barometer reflecting the up-to-date situation in the domestic industry.

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