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The industry barometer in Romania: extremely weak activity in December goes on in January as well
The extremely weak activity in the Romanian industry in December went on after the New Year but in January there were some signs of coming back, and the contraction at the beginning of the year has a cyclic character and represents a structural weakness of industry, according to which the monthly industrial character made by IRSOP and SNSPA and published on Monday.
The volume of production in the Romanian industry increased from an index of 40 in December to 45 in January but it was left in the contraction area under 50 points.
‘The decrease in the activity for two months on a row may affect the average rate of annual growth and the economy as a whole. Another effect is the growth of the corporatist debt due to weaker income’ the press release says.
At the same time, the new orders show a weak growth from 39 in December to 43 in January but both values are in the contraction area.
‘The average demand in December and January had the lowest level of the 12 months. The orders for export represent the only encouraging signal. The indicator went up from 50 in December to 59 in January and is now in the expansion area. If the relaunching of export is confirmed in the future months, it means that the industry could be influenced by the weakness of the global economic activity’ the press release says.
However, the effect of export on the economy depends on the international situation and the growth based on export works usually when the global economy is advanced, moreover, imports of raw materials were left stationary at 49 points, against 48 in December but they will grow probably in the context of export growth, according to the specialists.
The number of employees drops
The number of employees is in slight contraction but permanent since October last year. In December, the value of the indicator was 45 and in January it went up to 48. The specialists warn that, when the number of employees does not grow really it means that neither the production nor the income from taxes have no chance to increase in the following period.
The costs of production increased strongly from 70 in December to 75 in January reached the monthly level the highest in the last 5 years since the Barometer of Industry started.
Expectations of the managers increase
The synthetic indicator which measures the expectations of the managers about what is going to be in six months went up from 65 in December to 70 in January. The movement is similar to what happened in January 2018 when the indicator ‘jumped’ from 67 in December to 71 in January but the growth of the expectations do not seem to be based on rational convictions.
The industry barometer is made by IRSOP&SNSPA the Management Faculty on a sample of over 300 industrial companies which is representative at the level of the 15,200 industrial companies with over 9 employess in Romania which generate approximately 95% of the total of the turnover in industry.
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