Montenegro’s manufacturing sector recorded sharply different performances across its branches in the first half of 2026, with fabricated metal products more than doubling while overall manufacturing output declined.
Production of fabricated metal products, excluding machinery and equipment, increased 120.6% year on year from January through June. The gains were not broad-based, however, as apparel production dropped 27.8% and basic pharmaceutical products and preparations fell 19.4%. Eight manufacturing branches recorded lower output during the period, leaving total manufacturing production 0.4% below its level a year earlier.
Metal Products Drive Isolated Growth
The 120.6% increase in fabricated metal products represents a substantial expansion within an individual manufacturing category, but its effect has not translated into overall sector growth.
In a relatively small manufacturing base, individual categories can experience large statistical movements when production is affected by a limited number of contracts or production lines. Such increases can also reflect a low comparative base, the completion of a major order or the return of previously inactive production capacity. Determining the reason behind the metal-products increase will be important in assessing whether the expansion can be sustained.
Employment Rises Despite Lower Output
Manufacturing employment also increased during the period. The number of people employed in manufacturing was 7.61% higher year on year in June, even though sector-wide production declined during the first half of the year. The combination of rising employment and lower aggregate output could reflect recruitment ahead of future production, growth in labour-intensive activities that has not yet appeared in overall production volumes, or weaker productivity as employment expands faster than output.
Manufacturing producer prices increased 1.2% year on year, indicating that part of the sector continued to maintain pricing power. At the same time, higher employment, slightly lower total output and substantial differences between individual branches point to changing conditions for margins and competitiveness across manufacturers.
Apparel and Pharmaceuticals Remain Under Pressure
The declines recorded in apparel and pharmaceuticals stand in contrast to the expansion of fabricated metal products. Apparel production fell 27.8%, while basic pharmaceutical products and preparations decreased 19.4% during the first six months of 2026.
Both activities can contribute to higher-value employment and export diversification, making their weaker performance significant for the overall structure of manufacturing. The contraction in these branches means that the increase in metal-products production does not represent a general expansion across Montenegro’s manufacturing industry.
June Shows Monthly Manufacturing Increase
Manufacturing output recorded a stronger result in June, rising 16.7% compared with May. The monthly increase provides a different picture from the decline recorded over the first six months, but its continuation will depend on whether higher production spreads across several manufacturing branches rather than remaining concentrated among a limited number of producers.
The first-half figures therefore combine a major increase in one manufacturing category with declines across eight branches and a 0.4% overall contraction. For Montenegro’s manufacturing sector, the development of recurring orders, supplier activity, workforce investment and exports remains linked to whether individual production increases can translate into broader and sustained manufacturing activity.
