PMI in Russian manufacturing falls to 48.8 in Aug from 50.7 in July - S&P Global

MOSCOW. Sept 1 (Interfax) - The Purchasing Managers' Index (PMI) for Russia's manufacturing sector dropped to 48.8 points in August from 50.7 points in July, S&P Global research shows.

The latest data point to the first deterioration of operating conditions in the sector in three months.

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

S&P Global data indicate that a renewed decline in new orders amid weak demand and declining customer purchasing power affected the sector's performance in August. The rate of decline in new export orders was the second fastest since September last year. Correspondingly, production volumes also contracted for the first time since April of this year, albeit at a slight pace.

Operating expenses in the sector increased significantly, as companies reported rising prices for fuel and imported goods. Cost-push inflation was the fastest since January. Selling prices also accelerated despite weak demand, as companies sought to pass on increased costs to customers.

Staff numbers continued to decline in August at the fastest pace in three months.

Work in progress continued to decline. Although the rate of decline slowed compared to July, it was among the fastest in five years. Companies indicated sufficient capacity to handle incoming new orders.

Purchasing activity declined following three months of growth. Respondents reported a decline in raw material needs amid weak demand. Supplier performance worsened, with longer delivery times owing to logistical issues and fuel shortages.

Companies' confidence in the sector's prospects improved, with respondents linking positive expectations for growth in production over the next 12 months with hopes for stronger demand and investments in marketing.