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Romania's industrial activity has flatlined on almost all indicators this October, yet the managers' expectations for the next six months are slightly up, "probably against the backdrop of the change of government and of hope for a better new year," shows the Industrial Barometer worked out by the Management Faculty of the Bucharest National University of Political Studies and Public Administration (SNSPA) and IRSOP.
The document released on Friday shows that Romania's production volume dropped from 58 to 57 points, while stocks continued to grow slightly from 45 points in August to 49 in October. "The accumulation of stored products in the absence of growth could signal sales difficulties," the authors of the Barometer note.
In terms of demand, new orders are at 56 points compared to 58 in September - a decrease that, although apparently insignificant - announces a weak production in the coming months. There was also a minimal improvement in export orders from 50 to 52 in October, which shows that exports have not recovered and are further on the brink of contraction, which is below 50 points.
As regards imports of raw materials, the index stayed the same in October as in September, specifically at 57, and the conclusion of the experts is that in the absence of domestic orders and without exports, the imports of raw materials could deteriorate rapidly.
The number of employees remains at the same level as last month, at 48 points. "The companies have made partial layoffs, probably in the area of temporary workforce, and for the time being the amount of orders does not encourage hiring. This contraction has an impact on budget revenues and on the state's expenses with unemployment benefits," the experts said.
According to the Barometer, production costs are at a four-month high, at 67 points in October, compared to 60 in July. "The prices charged by companies for their products had fallen slightly in September compared to August, but in October they rose again to 55 points compared to 52 in September. The evolution of prices is more volatile than the evolution of production costs," the document notes.
As far as the managers' expectations are concerned, the global index of confidence in the industry's performance from now in 6 months increased to 61 points, compared to 52 in July, which was the lowest level of this index this year.
"It is not very clear why managers are more optimistic, although growth is at a standstill. They are probably relying on external factors, namely the political change in Romania, the slight stabilization of the western economies and hopes pinned to the approaching new year," the authors of the survey note.
The monthly barometer with the up-to-date situation in the industry is conducted by IRSOP and SNSPA on a sample of 300 industrial companies representative for Romania's 15,200 industrial companies with over nine employees that generate about 95 percent of the total industrial turnover.
The data was collected via direct interviews with company managers between November 26 and 28, 2019.
