PMI in Russian manufacturing rises to 49.4 in Jan from 48.1 in Dec - S&P Global

MOSCOW. Feb 2 (Interfax) - The Purchasing Managers' Index (PMI) for Russia's manufacturing sector rose to 49.4 points in January from 48.1 points in December, S&P Global research shows.

January manufacturing data signaled a less pronounced decline in operating conditions but the recent increase in VAT led to a marked acceleration in inflationary pressures, S&P Global said.

Index readings above 50.0 points indicate growth in business activity, while those less than 50.0 show a decline.

New orders at Russian manufacturing firms continued to fall at the start of the year amid weak demand. Nevertheless, orders fell at their slowest rate in eight months. Production volumes also declined, but at the slowest pace in the current 11-month period.

Input price inflation accelerated significantly in January. Operating expenses growth was the highest in a year, with respondents largely attributing the increased costs to the recent VAT increase.

A historically elevated rise in input prices following VAT changes led goods producers to increase their output charges during January, as firms sought to pass on greater costs to customers. Charge inflation was the highest since October 2023.

Firms sought to cut costs by reducing their staffing numbers. Employment fell at the fastest rate since last June.

A sustained decrease in new orders enabled firms to continue to deplete their backlogs of work. Input buying was reduced again at the start of the year.

Russian manufacturers registered greater optimism in the outlook for output in the coming year during January. The level of confidence was below average, however, and among the weakest in nearly three-and-a-half years. Respondents said that although they hoped new product releases would boost new orders, concerns regarding demand conditions remained.