Romania’s PMI heralds possible bottoming-out in manufacturing amid years-long decline

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.