Romania’s industrial activity deteriorated further in July, with industrial output (chart) falling 6.3% y/y and manufacturing output declining 7.3%, according to data published by the statistics office INS, taking production to its lowest level in a decade outside the March-June 2020 lockdown.

On a seasonally adjusted basis, industrial output fell 1.4% m/m in July, while manufacturing production declined 2.1%. The figures point to continued weakness in hard data despite more encouraging signals from business surveys.

Romania’s Manufacturing Purchasing Managers’ Index (PMI, chart), compiled by BCR, rose above the 50-point threshold separating expansion from contraction in July, reaching 50.1 points. The index improved further to 51.1 points in August, marking the second return to expansion territory in two years.

Performance varied significantly across industries. Food manufacturing and paper products were the strongest performers in July, with production at 118% and 115% of their 2021 annual averages, respectively. By contrast, metal production and chemicals were more than 30% below their 2021 levels.

The automotive industry, which remains important to Romania’s manufacturing base, stood at 91.5% of its 2021 average in July. Production in the sector had been weaker in previous months.

Manufacturing output had already fallen to 95%-96% of its 2021 annual average during the first half of 2026, from levels close to 100% in 2025, and reached 92.7% of the 2021 average in July. The sector has recorded four years of decline since the post-pandemic recovery.

The improvement in PMI readings could signal a stabilisation in the second half of the year. However, production would need to recover substantially and consistently for a broader industrial recovery to emerge. Even if activity bottoms out in the second half, manufacturing output is expected to remain in negative territory for a third consecutive year.

“Weak hard data from the first half of the year suggest that Romanian manufacturing output is heading for a fourth consecutive annual contraction,” BCR said in its August PMI release.

BCR analysts identified higher defence spending as a potential source of support for industrial activity across Europe, but said any recovery driven by this factor was likely to remain “uneven, with geopolitical uncertainty continuing to weigh on the regional outlook.”