Manufacturing Sector Faces Challenges, Yet Feelings of Optimism Persist
Romanian manufacturing sector descends further into a contraction state in March, according to the PMI® data by BCR.
The Romanian manufacturing sector tanked further in March, signaling a deterioration across elements of the headline PMI (Purchasing Managers' Index). New orders and output decreased at an accelerated pace, leading to deeper job cuts. On the flip side, improved performance from suppliers was recorded for the first time in history.
The headline BCR Romania Manufacturing PMI – a composite single-figure indicator of manufacturing performance – dropped to 46.9 in March from a six-month high in February (48.3). This decrease was driven by all five PMI components contributing negatively to the overall figure.
The contraction in new orders became more pronounced, mainly due to challenging demand conditions and tight customer budgets. Export orders also plummeted at a sharp rate, making it the quickest decline since the start of 2025. Factories continued to scale back their production volumes for the tenth month in a row at an accelerated pace.
Reduced demand for inputs partially alleviated some cost pressures, and increased confidence in the outlook for output also brightened. Inventories of purchases took a nosedive, with firms preferring to use existing stocks rather than buy new supplies, leading to a surge in withdrawal rates.
Supplier delivery times shortened slightly but marked a first-time improvement in the survey’s history, easing pressure on supply chains. Response times improved due to fewer delays, better input availability, and reduced disruptions.
Manufacturers cut costs by lowering staffing levels, often resulting from non-replacement of leavers and redundancies. Backlogs of work decreased at a moderate rate, as factories completed outstanding orders using excess capacity.
Inflationary pressures persisted, albeit at a somewhat slower pace, as suppliers raised their costs, and employment expenses climbed. Despite adverse conditions, manufacturers remained optimistic about future output levels, with the degree of optimism inching up to a nine-month high in March.
Ciprian Dascalu, Chief Economist at BCR, noted, "The BCR Romania Manufacturing PMI dipped in March to 46.9 from 48.3 in the previous month. Expecting a more supportive external environment and the impact of newly adopted fiscal stimulus in Germany, manufacturers remain hopeful for an improvement in the sector."
Insights
Even though the manufacturing sector faces ongoing challenges, there is optimism about future recovery and growth prospects as demonstrated by increased confidence in the outlook for output and resilient business expectations. However, the lingering effects of low demand and the uncertainty surrounding US Tariffs on autos are factors that manufacturers should closely monitor.
In addition, producer prices increased by 4.03% year-on-year in February, echoing trends seen in other sectors like electricity and manufacturing. Moreover, Romania might miss its economic growth targets for 2025 and 2026 due to domestic challenges according to some forecasts.
The panel of experts on the manufacturing sector, despite acknowledging ongoing challenges, expressed an optimistic outlook for recovery and growth. average future output levels showed a nine-month high in March, signaling resilience in business expectations. However, the lowering of new orders, driven by challenging demand conditions and tight customer budgets, remains a concern for the sector. Furthermore, the average producer prices in the sports sector like electricity and manufacturing saw an increase of 4.03% year-on-year, a trend that manufacturers should watch closely, including the potential impact of US Tariffs on auto commodities.
