The economic situation survey made by the National Commission for Prognosis estimates a 5.1% drop of industrial production in the first quarter of 2024, compared with the same period of last year, due to problems in supply chains and high prices for raw materials and energy.
Moreover, surveyed managers of industrial companies point out a 6% decrease in work productivity in the first quarter of 2024, with a simultaneous increase of 6% in terms of total turnover, based on an 8.4% increase in turnover on the internal market and an increase of only 0.4% in turnover on the external market.
“The evolution of industry in Q1/2024 compared with the same period of the previous year, according to estimates of companies in the survey, indicates a reduction trend especially in terms of industrial production and of finished products stocks, as well as of work productivity, while the volume of turnover deflated with industrial production price index will increase, particularly for the internal market”, states the analysis.
The National Commission for Prognosis believes stocks of finished products could register an even bigger decrease, of over 21%, given the context anticipated by companies’ managers, a predictable evolution considering the consecutive increases in Q1 of 2022-2023.
Slight increase in the number of employees
A 0.6% increase in terms of average number of employees is estimated for Q1/2024 compared with Q4/2023, which, paired with the drop in industrial production, could lead to a decrease in work productivity of 6%.
The 3.3% decrease of industrial production will continue its downward trend compared with the last quarter of 2023, due to modest demand and high energy prices. Meanwhile, the total industry turnover is expected to drop by 3.0% considering the significant decrease of industry turnover of 7.3% on the domestic market, while foreign demand will go up 4.9%, resuming the trend of last year’s last quarter.
The Romanian industry sector started its decline cycle in 2018 and continued throughout 2019. In 2020, the year in which value chains were blocked worldwide, Romanian industry dropped by double digits. However, in 2021, industry recorded an increase statistically, compared to 2020, an increase which was only natural considering the collapse in 2020. But in 2022, industry resumed its downward trend.
Industrial production estimates for Q1/2024 compared with the same period of last year:
- Branches with an estimated decrease of over 20%:
– repair, maintenance and installation of machines and equipment;
– leather tanning and finishing;
– service activities related to extraction;
– tobacco products manufacture;
– vehicles, machines and equipment manufacture.
- Branches with an estimated decrease of 20% – 10%:
– clothing manufacture;
– basic pharmaceutical products and pharmaceutical compounds manufacture;
– printing and media reproduction of records;
– road transport vehicles manufacture;
– low-rank and high-rank coal extraction;
– textile goods manufacture.
- Branches with an estimated decrease of 10% – 5%:
– metallic ores extraction;
– manufacture of other products from non-metallic minerals;
– other extraction-related activities;
– manufacture of computers and electronic and optical products.
- Branches with an estimated decrease of 5% – 0%:
– beverage production;
– coke industry goods manufacture; –metallurgical industry; – metallic works and products industry;
– energy industry;
– crude oil and natural gas extraction.
- Branches with an estimated increase of 0% – 5%:
– furniture manufacture;
– wood processing;
– electrical equipment manufacture;
– rubber and plastic products manufacture;
- Branches with an estimated increase of 5 – 10%:
– chemical substances and products manufacture;
– food industry;
– paper and paper products manufacture.
- Branches with an estimated increase of over 10%:
– manufacture of other means of transport.
Work productivity continues to decrease in Q1/2024
In the first quarter of 2024, a drop of 4.9% in terms of work productivity is estimated compared with the last quarter of 2023, considering an estimated decrease of 3.3% of industrial production volume, and a 1.3% increase in the number of industry employees respectively. According to these estimates, work productivity is expected to drop 6.0% compared with the same quarter of 2023, which signals possible problems of the production sector that could generate higher costs and lower competitiveness of local industrial products in the medium term.
Unit labour cost went up 2.8% in Q1/2024
In Q4 of 2023, industry unit labour cost went up 7.7% compared with the previous quarter, due to a 7.8% raise of the net income, while the increase reached 17.6% compared with the same quarter of 2022, and the yearly increase was 21.2% given the 17.1% income raise for the same analyzed interval. For the first quarter of 2024, companies see a 2.8% increase in terms of unit labour cost compared with the previous quarter, and a 17.9% increase compared with the same quarter of 2023 respectively, considering a possible raise of 10.9% of the industry total net income, and a decrease of work productivity respectively for the same analyzed interval (-6.0%).
***
