Russia’s manufacturing activity hit a five-month low close to stagnation in February as new order growth softened and inflationary pressures increased, survey data from IHS Markit showed on Friday.
The Manufacturing Purchasing Managers’ Index, or PMI, fell to 50.1 in February from 50.9 in January, said the latest report by the business data provider. A PMI reading above 50 suggests growth in the sector.
“The impact of a recent hike in VAT continued to push up input costs. Firms were able to partly pass higher expenses onto clients, as output charges rose at the quickest rate for almost four years,” IHS Markit said in a press release.
New order growth was the slowest since September and exports orders decreased at the fastest pace since April 2017. Output prices rose at the fastest rate since March 2015 after VAT hike.
Meanwhile, business confidence was the second-highest since May 2013, IHS Markit report said.
“Despite a softer rise in new business and intense inflationary pressures, survey respondents remained upbeat that output levels would improve over the coming 12 months.”
The Russian industry and the manufacturing sector’s growth has slowed after a positive streak in 2018. This week, Russia’s Industry and Trade Minister Denis Manturov said during a working meeting with President Vladimir Putin on Monday that the country’s manufacturing industry grew by 2.6% last year.
According to the minister, the fastest-growing sectors were railroad rolling stock manufacturing, first of all, the freight stock manufacturing, and construction highroad engineering, which soared by 23%.