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Industrial barometer : Industry recovers slightly in February
Industry got out of contraction but the advance was modest in February, according to data of the industrial barometer made by IRSOP and SNSPA Management Faculty.
The recovery is supported by two main engines- increase of domestic demand and exports. However, increases could not recover drops of December and January. Maybe the slight relaunch was below manager expectations because their confidence in future activity dropped against the previous month, according to the barometer.
Production volume went up to 55 points, compared to 44 in December and 46 in January, when industry was in contraction.
“If we attenuate volatility by calculating an average between January and February we notice that activity does not exceed 50.5 points, which means that in the first two months of 2018 industry was under the growth area. Stocks grew from 43 to 47 and are in the contraction stage, under 50 points,” the barometer mentions.
New orders recovered slightly by climbing from 45 to 54, but the average shows that in the first two months demand was contracted. Orders for export grew from 53 in January to 59 in February. The intensification of exports represents a strong force and shows how dependent the invigoration of industry is from exports made by a part of industrial companies. Raw material imports went up rather slowly, from 56 to 59 and is getting close to the maximum score of 61 points in the last 8 months.
The number of employees remained 50 points, a sign that hiring and firing remained balanced - companies do not hire more employees than those who end their activity.
Production costs remained at high level of 72 points, but slightly dropping compared to 74 in January. The drop could be connected to lower energy consumption because of intervals with higher temperatures. Anyway, the cost indicator is now over the 67 point average of the whole 2017.
Prices cashed by companies show a slight drop from 64 in January to 62 in February, after 6 months of consecutive growth. If the drop persists, it could show a deflation tendency. That is all companies wish the least in conditions of high debt degree of the industrial sector.
The managers’ optimism index shows the first drop in the last five years. In October 2017 the index had 59 points and in January it had gone up to 71. Last month it dropped to 68. The index value results from aggregation of distinct managers’ expectations about future demand, production and incomes. Maybe the maximum January score was backed by big expectations which did not fully confirm in January. Expectations drop even when reality contradicts them partially