Industrial sales accelerated their growth to 9.7% y/y in April from 4.6% y/y in March, according to the INSSE. Yet, growth was still below last year’s average and lower than the 11.9% y/y spike recorded in February. The speeding in April was mainly backed by a substantial growth in sales of extracted metals and by numerous double-digit sales rises among manufacturing segments. Yet, sales of extracted coal, oil and gas remained in the negative territory, in line with weakening production.
As for manufacturing, sales improved mainly in segments selling abroad, which reflects a pick-up in external demand. The most significant improvement was in other-than-road transport vehicles, tobacco, machinery and equipment and electronics. Industrial sales of metals and non-metals increased relatively strongly as well, sustained by the reported recovery in domestic construction. Nevertheless, there were some worsening reported in leather and furniture, which were mostly likely caused by a weaker domestic consumption of non-food products.
New orders in manufacturing accelerated growth to the highest level since November 2018, chiefly on the back of a jump in other-than-road transport vehicles. It reflects that Romanian shipyards received a new big order that would keep production on the rise for a while. New orders increased robustly in pharmaceuticals, machinery and equipment and electronics, most likely fuelled by external orders. The worst performers were metallurgy, chemicals, apparel and electrical equipment. We note that new orders of capital goods jumped by almost 20% y/y in April, which might reflect some better mood among industrial players.
Generally, industrial sales and new orders in manufacturing rebounded in April. The most important positive influence came from an external demand pick-up and from domestic construction recovery in the first months of 2019. Sales of most non-food products offered locally weakened, in line with easing domestic demand. Sales of extracted coal, oil and gas remained on the fall, as producers face burdening fiscal regime. Most of them put production partly on hold while negotiating with the government to soften some new measures which are affecting their profitability and investment capacity. Industrial sales remained heavily dependent on external demand, so local currency depreciation in May should support further improvement. Yet, their competitiveness is severely affected by high production costs, so we don’t expect spectacular performances even if the external demand would substantially improve.