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The industrial barometer regarding the results of  January 2018: contraction in industry continued in January

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January was the second month in a row when the activity in industry was in severe contraction. The  rhythm dropped severely in December last year and continued to stay weak in the first month of the current year. IRSOP/SNSPA predicted the extension of the drop starting from the frames of volatility, seen during 39 months.

The duration of the contraction makes more difficult to recover the losses and the relaunching of the growth but the managers are optimistic and think that the production and the orders will come back in the period  to come.

Every month, IRSOP and SNSPA ask a sample of managers if their company has orders, stocks, recruitment and other indicators increased or dropped against the previous month. An index based on the net rate between the answers shows expansion if it gets over 50 points and contraction if it drops under 50.

Production

  • The  volume of production was kept in the area of contraction at 46 points,against 44  in December

The stocks kept their level at 43 points, against 42 in December.

Demand

  • The new orders show a slight increase from 41 points in December to 45 in January. But the increase is weak and does not announce a quick escape from contraction.

  • The orders for export are in the area of growth over 50 points. But the orders stopped at 53 in December and January which explains probably why  the relaunching of the new orders in general was at the suboptimus level (45 points).

  • Imports of raw materials increased from 52 points in December to 56 in January. The discrepancy between the orders for export and imports show the persistence of the commercial deficit as well as the trend of the companies to invest in purchase of raw materials for future production.

Workforce

The number of employees was kept at 49 in January against 48 points  in December under the line which separates growth from contraction. The level of occupancy at the limit is not surprising due to the weak activity of the last two months.

Costs and income

  • The costs of production increased strongly to 74 points, against 68 in December, registering the highest level in the last 11 months. Probably  the imports have some say as the relaunching of the global economy boosted the demand for raw materials and raised the prices especially for oil and industrial metals.

  • The prices received by companies continued to  grow from 56 in November to 60 in December and 64 in January. It could be a sign of inflation, but for a short term the fact that the companies increase their power to establish the prices might be a good sign.

Expectations

  • The indicator for optimism of the managers continued to go up from 59 in October to 63 in November, 67 in December and 71 in January. The value of the indicator results from the combination of the distinct expectations of the managers regarding demand, production and future collections.
    The companies expect increase of the orders and of the volume of production. There might be at the basis of the expectations the hope that there will follow governmental expenses for infrastructure. However, against December, the managers are not so trustful that they will hire supplementary workforce, that they will increase orders for export, that the prices they get will increase, and the costs of production will decrease. The mix of trust and distrust suggest a future with a high level of uncertainty.

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