Romania Manufacturing PMI compiled by Erste Group’s local subsidiary BCR, has improved for the third consecutive month to 48.3 points in May – remaining in the contractionary region but still enough to support Erste Group’s hopes for mild industrial recovery this year, after three consecutive years of decline. 

“Although the index still points to a contraction in manufacturing activity, the continued upward trend is encouraging and may indicate that growth momentum is beginning to build in the domestic manufacturing sector,” Erste Group’s report reads.

The PMI readings, as of now, support only hopes for the stabilisation of the industrial activity.

The improvement in each main segment of the PMI index was visible over the past three months, but the starting point was very weak (February PMI marked the lowest reading in records), and the May reading remains in the contractionary area. 

The Output Index signalled a slower pace of contraction in May, although demand-side challenges remain. Several respondents noted that elevated cost pressures continued to weigh on production levels, while others cited supply disruptions and a broadly difficult economic environment. 

New Orders also showed a relative improvement this month, although the index remained in contraction territory. Respondents cited constrained customer budgets, driven by high inflation and economic uncertainty, as the main factors weighing on demand. 

After briefly rising above the neutral threshold in the previous month, the New Export Orders Index returned to contraction territory in May. Challenging global market conditions reportedly led to a renewed decline in international demand.

Separately, the correlation between PMI readings and the industrial output as reported by the statistics office INS has been historically puzzling. A prolonged period of PMI improvement during Q2-Q3 last year failed to prove indicative of industrial recovery. On the contrary, mild improvement in the seasonally-adjusted industrial output during the second half of 2024 and the first quarter of 2025 coincided with a deterioration of the Manufacturing PMI over the period.

iulian@romania-insider.com

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