Romania’s industrial activity further deteriorates in July despite encouraging PMI

In seasonally adjusted terms, industrial output dropped 1.4% m/m in July, while manufacturing output fell 2.1% m/m.

This came despite the Manufacturing PMI (Purchasing Managers’ Index), an economic indicator measuring the health of the manufacturing sector based on surveys of supply-chain executives, returning above the 50-point expansion/contraction threshold for the second time in two years in July. Compiled in Romania by BCR, the index reached 50.1 points in July and improved further to 51.1 points in August.

Among individual industries, food manufacturing and paper products posted the strongest performances in July 2026 compared with the 2021 annual average, at 118% and 115%, respectively. The deepest declines, of more than 30% compared with 2021, were recorded in metal production and the chemical industry. The critical automotive industry stood at 91.5% of its 2021 average in July 2026, although it had been even weaker in previous months.

The PMI’s return to expansion territory in July-August may herald the end of the years-long industrial decline - but it would come from very low levels of activity, and a genuine industrial recovery would require much more robust and sustained positive signals from purchasing managers.

In the first half of this year, manufacturing output fell to 95%-96% of the 2021 annual average, from levels close to 100%, reaching levels not seen since the lockdown period. In July, the manufacturing production index stood at just 92.7% of the 2021 average.

Romania’s manufacturing sector has undergone four years of decline following the post-pandemic recovery. A potential bottoming-out in H2, signalled by the encouraging PMI readings in July-August, would not reverse the full-year dynamics, with output expected to remain in negative territory for a 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 its August PMI estimate.

BCR analysts see higher defence spending as a potential source of support for industrial activity across Europe. However, they warned that a recovery driven by this factor is likely to remain “uneven, with geopolitical uncertainty continuing to weigh on the regional outlook.”