1 Mar 2018 14:50

PMI in Russian manufacturing drops to 50.2 in Feb, lowest since July 2016

MOSCOW. March 1 (Interfax) - The Russian manufacturing sector saw only a fractional improvement in operating conditions in February, IHS Markit research shows.

"Weaker overall growth stemmed from slower upturns in both output and new orders, with the pace of expansion in the latter at an eight-month low," IHS Markit said.

"Exports, however, grew solidly and at the quickest rate since November 2011. Meanwhile, price pressures remained subdued with charges rising only marginally, driven by fragile demand conditions," it said.

The seasonally adjusted IHS Markit Russia Manufacturing Purchasing Managers' Index (PMI) - a composite single-figure snapshot of the performance of the manufacturing economy - posted 50.2 in February, down from 52.1 in January. Index readings above 50.0 points indicate growth in business activity, while those of less than 50.0 show a decline.

The latest survey data signalled only a fractional improvement in the overall health of the sector. Although still above the 50.0 no-change mark, the index indicated the weakest manufacturing growth in the current 19-month sequence of expansion. Following three successive months of strengthening output growth, February survey data signalled a weaker expansion in production. The latest rise was moderate overall and the slowest since October 2017. Where an increase was reported, panellists linked this to greater new order volumes.

"Signs of fragile demand conditions were reflected in a slower expansion in new business among Russian manufacturers. The modest upturn in new orders was supported by the acquisition of new clients, but it was the weakest in eight months. In contrast, new export orders received by goods producers increased at the fastest pace since November 2011 amid greater demand from foreign clients," IHS Markit said.

"In an effort to attract new clients and amid greater competitive pressures, manufacturers raised factory gate prices only marginally. The increase was the weakest for 11 months and was muted in the context of the series history. Meanwhile, cost burdens rose at a faster pace, but one that remained below the long-run series average," it said.

"Although price pressures remained subdued in February, purchasing activity grew only marginally and at the slowest rate for four months. Buying was reportedly weighed on by weaker upturns in output and new orders. Despite the pace of depletion softening, stocks of purchases contracted strongly in response to the slower increase in purchasing quantities.

Furthermore, employment levels fell for the second month running. The pace of contraction accelerated to the quickest in almost a year, with backlogs also falling at a modest rate.

Business confidence, however, increased in February. Expectations towards the outlook for output reached a five-month high, with panellists linking positive sentiment to higher global demand," IHS Markit said.