3 Dec 2018 15:37

PMI in Russian manufacturing climbs to 52.6 in Nov, highest since July 2017 - IHS Markit

MOSCOW. Dec 3 (Interfax) - The Purchasing Managers' Index (PMI) for Russia's manufacturing sector rose to 52.6 points in November from 51.3 points in October, IHS Markit research shows.

The November PMI points to the biggest improvement in the business situation in Russia's manufacturing sector since July 2017.

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

"November survey data indicated the most marked improvement in the health of the Russian manufacturing sector since July 2017. The overall expansion was driven by faster upturns in output and new business, and the strongest increase in employment since January 2017. Foreign client demand also picked up, with new export orders rising solidly. Encouragingly, firms registered a robust degree of confidence in future output. Although price pressures remained marked, the rate of input cost inflation was well below those seen in the middle of the year, with some firms partly passing on higher costs to clients," IHS Markit said in a press release.

"Russian manufacturers reported a faster rise in output during November, with the rate of expansion reaching a ten-month high. Anecdotal evidence suggested the latest upturn was driven by greater new order book volumes and stronger client demand. Some firms also stated that production increased due to greater efforts to clear backlogs," it said.

"New orders received by Russian goods producers increased solidly in November. The rate of growth quickened to the fastest since January, and the rise was attributed to new client acquisitions and new product launches. The improvement in demand was broad-based, with new export orders increasing at the fastest rate for seven months. Reflecting a stronger rise in new business, manufacturing firms increased workforce numbers at the quickest rate since January 2017. The solid rise was linked to greater production requirements. That said, pressure on capacity softened further in November, with backlogs of work contracting for the fifteenth successive month.

Meanwhile, rates of both input price and output charge inflation accelerated in November. Greater cost burdens were attributed to higher imported input prices, stemming from the strength of the US dollar, and increased fuel costs. Some firms were reportedly able to partly pass on costs to clients through greater factory gate prices. The rate of charge inflation was strong overall.

Higher input prices and longer lead times contributed to a weaker rise in purchasing activity, with input buying rising at only a modest rate. Finally, business confidence increased in November, with manufacturers noting the second-strongest degree of optimism since May 2013. Positive sentiment was linked to new product launches and expansion into new markets," IHS Markit said.