Romania's industrial production contracted by 4.3% year-on-year in August, according to the National Institute of Statistics (INS).

The annual performance is the best since February (-2.4% yoy) and slightly above expectations.

Furthermore, in the core manufacturing sector, the annual decline was only 4.3% yoy in August.

The utility sector nearly recovered (-1.6% yoy) dragged up by the manufacturing and low energy prices (that encouraged the energy-intensive sectors).

Meanwhile, the primary mining and quarrying sector still lags more significantly (-10.5% yoy) due to the prolonged period of low demand for energy.

The seasonally adjusted industrial production index in Romania advanced by another 3.9% in August compared to July, further closing the gap to the pre-crisis floor reached in February.

The recovery rate slowed from +5.3% in July and around 16% per month in May and June. However, the performance was still better than implied by the exports' evolution, pointing to stagnant industrial activity in August.

The overall industrial production index, seasonally adjusted, lags by 7.1% versus February, but only by 5.7% in the core manufacturing sector.

When the coronavirus crisis disrupted the global production chains in the first quarter of the year, Romania's industry was already losing ground: the production index posted negative annual performances during the entire second half of last year.

The improvement in January and February came somewhat as a surprise. Compared to December 2019, the Romanian manufacturing sector's performance in August was only 2.1% weaker, an indicator of a pretty quick recovery in May-August after the 42% plunge seen in March-April. More or less, the recovery in the manufacturing industries was V-shaped. Nevertheless, complete recovery is still at risk, given the deteriorating epidemiological situation in Romania and its main trade partners. 

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iulian@romania-insider.com