The bigger picture, however, does not point to a sustainable or even relevant industrial recovery, contrasting the improvement in the PMI readings in Q3.
In the first two months of the third quarter (Q3) taken together, the industrial output contracted by 3.6% y/y (-4.5% y/y for the core manufacturing industries) and in seasonally-adjusted terms edged down by 1.8% compared to the average level of Q2 (-2.6% for the manufacturing industries).
The 12-month rolling industrial output contracted by 2.1% y/y as of August (-2.9% y/y for the manufacturing), visibly deteriorating from the -0.9% y/y (-1.2% y/y for manufacturing) annual decline in 2025 or -1.6% y/y (-1.1% y/y for manufacturing) in 2024.
The value added generated by industry also contracted in the first two quarters of 2026, by 1.2% y/y and 3.9% y/y respectively. However, the decline is smoother than the sudden correction during 2023-2024, when the value added generated by industry plunged by some 27.5% from Q4 2022 to Q4 2024.
Over the same two years, the gross industrial output edged down by only 1.4%. The value added deteriorated at a much faster pace because of rising energy prices eroding industrial margins. A similar effect is evident in Q2 compared with Q1 and could intensify in the coming quarters if energy prices stabilise at current high levels, driven by the war in the Middle East.
BCR Romania Manufacturing PMI moved to expansionary territory for the first time since Q2 2024 and only the second time in the index's history.
Romania’s PMI has remained in the expansionary territory for the second consecutive month in September, at 50.9 points, just below the 51.1 reading in August, prompting positive sentiment from analysts of Erste Group – which compiles the indicator.
New orders and output sub-indicators remained the main drivers for expansion in September.
PMI data pointed to a stronger second half of the year for manufacturing, which should provide broader support to the industrial sector according to Erste Group. Looking at the average PMI for the third quarter, it stands at 50.7, signaling a modest expansion in manufacturing activity. This marks the first quarter in expansion territory since Q2 2024 and only the second such occurrence in the index's history.
Even so, 2026 is still likely to mark the fourth consecutive year of contraction in industrial output, the Austrian financial group admits. The ongoing conflict in the Middle East is exerting significant pressure on energy markets, raising costs for energy-intensive industries. Erste analysts believe a resolution of the war would provide some relief and be highly beneficial for domestic manufacturing.
While substantial investments in EU security, along with large-scale fiscal stimulus in Germany targeting infrastructure and defense, are expected to support European industrial output, the recovery is likely to be uneven.