Operating conditions deteriorate for second successive month in June in Russia
Staff Writer |
June survey data signalled a second successive month of deterioration in operating conditions across the Russian manufacturing sector.
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The latest decline was driven by the first fall in new orders since July 2016 and a further drop in employment.
Output growth also eased for the second month running.
Meanwhile, input price inflation remained marked despite easing from May’s 32-month high and charges rose at the second-fastest rate since September 2015.
The seasonally adjusted IHS Markit Russia Manufacturing Purchasing Managers’ Index (PMI) – a composite single-figure snapshot of the performance of the manufacturing economy – posted 49.5 in June, down from 49.8 in May.
The latest figure signalled a marginal deterioration in operating conditions across the Russian manufacturing sector.
The current sequence of decline (at two months) is now the longest since May 2016.
Output growth remained marginal in June, and softened to the joint-weakest since July 2016.
The latest expansion extended the current sequence of increase to 26 months, but the rate of growth was below the long-run series average.
New orders meanwhile contracted for the first time in almost two years, albeit only marginally.
The decline was largely attributed to weaker client demand and a reduction in new customers.
New business from abroad remained in growth territory, though the rate of expansion eased to a fractional pace.
Moreover, the upturn was the slowest for six months.
Input cost inflation remained elevated in June, despite easing to a three-month low.
The marked pace of increase was largely attributed to higher raw material costs, especially oil, and exchange rate depreciation.
The rise in cost burdens was faster than the long-run series average.
Despite difficult demand conditions, manufacturing firms reported a sharp rise in output charges.
The pace of factory gate price inflation was the secondfastest since September 2015, and stemmed from robust increases in input costs.
Lower new orders contributed to further contractions in employment and backlogs.
Rates of decline accelerated for each, with the pace of backlog depletion quickening to the fastest since January 2016.
Similarly, buying activity at goods producers declined for the second successive month in June, and at a marginal rate.
Panellists stated that the latest fall was driven by weaker output growth and reduced incentives to stockpile inputs.
To that end, pre-production inventories decreased at a strong rate.
Output expectations for the coming year remained robust in June, despite dipping to a six-month low.
Anecdotal evidence linked optimism to hopes of greater production and increased product development. ■