Romania's manufacturing PMI index, computed by BCR Erste Group based on S&P methodology, deteriorated to 48.1 in January after it showed signs of recovery in December 2025 (48.9). The industrial recovery, broadly expected for this year, is thus more likely to occur in the second part of the year – consistent with low-base effects – but this only if the second-round effects of the fiscal consolidation policies do not cause prolonged economic stagnation.

The output index posted a relative improvement in January, remaining in the negative area but marking the best performance in four months. The new orders index deteriorated from December and remained at a significant negative value. But the overall deterioration was caused by the more detrimental conditions on the labour market (insufficient manpower reported – an effect of the tighter income policies conducted by companies amid an uncertain environment).

Reduced demand, partly due to higher prices on the back of tax hikes, and insufficient manpower constraining output in some cases, were the main problems reported. New orders showed an accelerating pace of decline in January, Erste research confirmed.

The PMI index, however, shows no correlation with, or predictive insights for, the industrial output – expected by the state forecasting body (CNP) to grow by 0.5% in gross output and value added terms this year - after three years of negative performances. 

In its December 2025 forecast, CNP expected the output in the core manufacturing sector to grow by 0.6% this year, after the 0.8% decline in 2025. 

The improvement would be driven this year by the slower declines (not increases) in some problematic sectors: metallurgy, chemistry, and automotive, according to CNP. The sectors with positive growth rates remain mainly the same: food manufacturing, pharma, metallic constructions, electronic and optic parts, various industrial machinery and equipment. Crude oil refining is seen as shrinking by 9.3% (+4.2% y/y in 2025), and mining and quarrying would compress by another 1.4% (-1.0% in 2025) before the positive performance expected since 2027 after Neptun Deep begins production.

In line with CNP's forecast rather than its PMI index, Erste Research remains positive on this year's industrial performance.

"Considering the external environment expectations, we should see an improvement in 2026, and we could end up with industrial production regaining some growth momentum," according to the financial group's press release.

External demand is seen as a key factor for domestic manufacturing businesses. Substantial EU security investments and Germany's fiscal stimulus for infrastructure and defence spending are expected to boost European industrial production.

iulian@romania-insider.com

(Photo source: Arlawka Aungtun/Dreamstime.com)