Russian Manufacturing Sector’s Slump Continues for Sixth Month

Activity in Russia’s manufacturing sector contracted again in October as weaker client demand took its toll, the monthly PMI survey by IHS Markit showed on Friday.

The Markit Purchasing Managers’ Index (PMI) rose to 47.2 in October from 46.3 in September, which was its lowest reading since May 2009, but remained below the 50.0 mark that separates expansion from contraction for the sixth month in a row.

“Manufacturers across Russia continued to register strong falls in output and new orders, with client demand declining at the sharpest pace since April 2009 in October,” said Sian Jones, an economist at IHS Markit, which compiles the survey.

“Underpinning the decrease in demand was an accelerated and marked contraction in new business from abroad,” Jones said.

New orders declined due to hesitancy among clients in placing orders, the monthly survey showed.

Employment in the sector shrank further as production requirements declined. But manufacturing companies remained robustly optimistic regarding their output over the next year.

“Business confidence reportedly stemmed from planned investment in machinery and new product developments,” Jones said.

The picture painted by the PMI report fits into the broader economic situation in Russia where gross domestic product is on track to expand by around 1% this year, down from 2.3% in 2018.