Industry does not recover in July after crash in June (analysis)

The industry did not recover in July after the powerful crash in June, the Romanian Industry Barometer shows, mentioning that in the summer crashes in industry are hard to recoup, especially when the global context is difficult. 

"Seasonality partially explains the poor activity. Many companies shut down in July for an entire month of vacations, but the main cause of stagnation is the insufficient rate of internal and external orders. The weak results and the difficult context put pressure on the expectations of managers regarding the future. Trust continues to diminish," reveal the conclusions of the Romanian Industry Barometer, conducted by IRSOP and the Management Faculty of the National University of Political Studies and Public Administration (SNSPA). 

According to the study, the growth in production stopped at 52 points, close to 50 points which means zero growth, while stocks stood at 46 points. New orders are closer to contraction, 51 as compared to 53 in June, the export orders did not recover from contraction (46 points), while the imports of raw materials stopped at the level of June, specifically 52 points. 

In what regards labor, the indicator shows a reduction in the number of employees - 47 points. 

Production costs remain in the growth area - 62 in July as compared to 63 in June, while the prices obtained by companies showed slight growth (55 points). 

"The global managers' trust indicator dropped to 52 points, as compared to 70 where it stood in January. The drop in the past 6 months was linear and continuous. The probability that in the coming months the managers' trust fall into negative territory (under 50 points) has increased," the study's representatives say. 

Starting with 2014, each month, IRSOP and SNSPA ask a sample of managers if in their company production, orders, stocks, employment and others parameters have gone up or down as compared to the previous month. An index based on the net ratio between answers signals growth if above 50 points and contraction if below 50 points. 

The barometer presents the activity in the industry in July 2019. It used a sample of 283 industrial companies, representative at the level of the 15,200 industrial companies with more than 9 employees in Romania, which generate approximately 95% of the total turnover in industry. The data was collected through direct interviews with the managers of the companies in the August 22-27, 2019 interval.