Hit by a downturn in output and new business, manufacturing activity in Russia contracted for the second straight month in June, while confidence in the sector fell to a near one-year low, according to the Markit purchasing managers’ index (PMI).
The reading slid to 48.6 in June from 49.8 the previous month, further below the 50.0 mark that separates positive from negative trends, the business survey showed on Monday.
“The Russian manufacturing sector continued to show signs of weakness in June, as production and new business dipped into contractionary territory for the first time since August 2018,” said Sian Jones, an economist at IHS Markit, a business information provider that compiles the survey. “Weighing heavily on overall demand conditions were lacklustre export sales.”
The rate of decline in new export orders quickened to its fastest since February. Panellists highlighted concerns over weaker client demand.
Companies in the manufacturing sector also registered a third consecutive decrease in workforce numbers in June, the monthly survey showed.
Confidence among manufacturing companies declined even though they remained upbeat about the output outlook, with the degree of confidence higher than the series trend, the survey showed.
“Input costs rose again in June. Manufacturers stated that higher raw material and supplier prices drove cost burdens up. That said, the rate of inflation was the softest since July 2017. Firms partly passed greater input prices on to clients through higher charges, but the pace of increase was only marginal overall, with some panellists suggesting that discounting and promotions held back rises in charges,” IHS Markit said.