Slowdown in Russia’s Manufacturing Sector Eases in July

Survey data from IHS Markit showed last week that Russia’s manufacturing sector contracted at a slower pace in July, mainly on further declines in output and new orders. 

The Purchasing Managers’ Index, or PMI, for the manufacturing sector rose to 49.3 in July from 48.6 in June. Any reading below 50 indicates contraction in the sector and the score remained below the mark for a third straight month.

Output in the manufacturing sector decreased for a second straight month, albeit marginally.

The pace of decline in new orders remained unchanged in July, which was quickest since July 2018. New business from abroad fell for the sixth time in the last seven months and at the fastest rate since February.

Staffing levels rose for the first time in four months in July, partly due to the need to process new orders which led the backlogs of work to fall sharply. Outstanding business fell at the fastest pace in two years.

Inflationary pressures softened in July with the increase in input costs being the weakest since February 2017 and leading to just a fractional rise in output charges.

Business confidence of future output weakened to the joint-lowest since July last year as reduced purchasing power dented optimism.

“Lower client purchasing power and issues with finance reportedly hampered demand from domestic and foreign customers,” said Sian Jones, economist at IHS Markit. 

“Inventory levels continued to fall as stocks of inputs and finished goods both declined during the latest survey period. Purchasing activity increased only fractionally, in part due to efforts to replenish stocks,” he added.