The Manufacturing PMI (Purchasing Managers’ Index), an economic indicator that measures the health of the manufacturing sector based on surveys of supply-chain executives, compiled in Romania by BCR, recorded a second consecutive month in expansion territory, rising to 51.1 in August from 50.1 in July. The rise was driven by two of the most relevant components of the index: output and new orders.

The PMI’s return to expansion territory may herald the end of the years-long industrial decline - but it would occur at very low levels of activity, and a genuine industrial recovery would require much more robust and prolonged positive signals from purchasing managers. The improvement in German manufacturing suggested by the latest PMI readings represents a positive, though still cautious, signal for the external demand conditions relevant to the Romanian manufacturing sector.

In the first half of this year, manufacturing output plunged to 95%-96% of the 2021 annual average, from levels close to 100%, reaching levels not seen since the lockdown period. Romania’s manufacturing sector underwent four years of decline following the post-pandemic recovery. The bottoming-out in H2, heralded by the encouraging PMI readings in July-August, would not reverse the full-year dynamics, which are expected to remain in negative territory for the third consecutive year.

“Weak hard data from the first half of the year suggest that Romanian manufacturing output is heading for a fourth consecutive annual contraction,” BCR said in its press release accompanying the August PMI estimate.

BCR analysts see the recovery linked to higher defence spending as providing some support to industrial activity across Europe. However, they warned that the recovery generated by this factor is likely to remain “uneven, with geopolitical uncertainty continuing to weigh on the regional outlook.”

Developments in Germany support cautious optimism

BCR elaborates on the positive momentum in the German economy, reflected in Q2 output readings (+0.7% q/q but -0.3% y/y) and encouraging PMI readings in July-August. The overall pattern mirrors that in Romania, although the industrial decline is steeper in Romania (-4.5% y/y in Q2), which is not surprising given the close relationship that large portions of the local manufacturing sector have developed with German industrial groups.

Germany’s PMI further rose to 54.3 in August from 52.2 in July. However, the upturn was led by the intermediate goods sector, suggesting that growth is still being supported to a degree by safety stockpiling amid tight supply conditions, according to Phil Smith, economics associate director at S&P Global Market Intelligence, cited by Reuters.

After also pointing to the diverging story of Germany’s Flash Services PMI, which fell to 48.5 in August 2026 from 49.8 in July, BCR concludes that the improvement in German manufacturing represents a positive, although still cautious, signal for the external demand conditions relevant to the domestic manufacturing sector.

Detailed developments revealed by Romania’s August PMI

Panellists widely linked the increase in production to stronger order volumes and a general pick-up in demand. Romanian manufacturers saw continued improvement in new orders in August, supported by successful promotions and sales negotiations. Growth remained slight but was among the strongest recorded.

Export orders also returned to growth for the first time in four months, posting the strongest increase in the survey’s three-year history, although most firms reported no change from July.

Business confidence for the next 12 months reached a new record low in August, after hitting the previous record low in July, reflecting concerns about the economic and geopolitical environment.

iulian@romania-insider.com

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