Romania: Economic confidence softens

The main driver for the pull-back in the Economic sentiment index (ESI) was manufacturing confidence, tracing the recent disappointing readings for sentiment indicators out of Germany and Western Europe.

Romanian manufacturers are citing lower order book levels and expected production for the weak morale, despite a decrease in inventories. For the fourth quarter, the manufacturers are reporting lower capacity utilisation. There is also a minor increase in the percentage of total surveyed reporting labour as a factor limiting production.

Services sentiment rebounded in October, after 3Q18 was the worst quarter since 1Q15, as both current and the expectations component improved, but this was not enough to offset the decrease in manufacturing confidence. Retail sector confidence declined on lower past sales and expectation despite lower stocks.

The sentiment came in better for construction on better order books and employment expectations. Constructors are reporting for the fourth quarter a decrease in operating number of months ensured by the current backlog.

Consumer confidence decline from one year high as the unfavourable outlook for jobs and savings outweighed the improved economic outlook and financial situation. In terms of investment over the next twelve months, consumers are looking to increase spending on home improvement, intentions to buy a house stagnated, while car purchasing intentions decreased.