First deterioration in Russian manufacturing since July 2016
Staff Writer |
For the first time since July 2016, PMI data signalled a deterioration in business conditions in the Russian manufacturing sector in May.
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Although the decline was only fractional, it was driven by falls in employment and stocks of purchases, while May also saw slower growth in output and new orders.
Despite signs of slower client demand, business confidence remained robust overall.
The seasonally adjusted IHS Markit Russia Manufacturing Purchasing Managers’ IndexTM (PMI) – a composite single-figure snapshot of the performance of the manufacturing economy – posted 49.8 in May, down from 51.3 in April.
Although the decline across the Russian manufacturing sector was only fractional, it was the first such deterioration since mid-2016.
Alongside weaker expansions in production and new business, there were contractions in employment, and stocks of purchases.
Output levels across the manufacturing sector expanded at a slower rate in May, contributing to the fall in the headline PMI.
The pace of growth was marginal and the weakest since October 2017.
Still, where increases were reported, panellists linked this to a sustained upturn in new orders.
Similarly, the rate of growth in new business received by manufacturing firms eased to a marginal pace, and one that was the slowest seen in 22 months.
Some panellists raised concerns regarding lower demand from traditional customers.
Meanwhile, new export orders increased only marginally, and at the weakest rate for four months.
On the price front, cost burdens faced by goods producers continued to rise markedly.
The steep rate of inflation was the fastest seen since September 2015, and was reportedly linked to exchange rate weakness that drove import prices higher.
Although the pace of charge inflation softened slightly, it was still the second-quickest in almost two years.
Employment levels contracted in May, marking the fifth decrease in the last seven months.
Anecdotal evidence linked job shedding to slower growth in new orders and efforts to cut costs.
Reduced pressure on capacities was also reflected in a faster decline in the level of outstanding business.
Following a slight improvement in April, supplier delivery times lengthened in May.
The deterioration in vendor performance and higher input costs were commonly stated as factors behind the first fall in purchasing activity since October 2017.
Supplier delays also contributed to a further decline in preproduction stocks.
Expectations towards output over the coming year remained robust in May, despite slipping to a fivemonth low.
Anticipations of production growth and more favourable demand conditions drove optimism. ■