Russian manufacturing business conditions deteriorate further
MOSCOW. Dec 1 (Interfax) - Russia's manufacturing sector continued to suffer an overall deterioration in business conditions in November, VTB Capital said in a research note.
Output rose only marginally, while incoming new orders fell for the first time since June. Growth of purchasing activity was maintained, but at a slow pace, while employment continued to fall.
VTB Capital's headline seasonally adjusted Russian Manufacturing PMI remained below the no-change mark of 50.0 in November, indicating an overall decline in manufacturing business conditions. Although the November figure of 49.1 indicated only a marginal rate of deterioration, it was a slightly worse outcome than the 49.6 posted in October. The fall in the PMI primarily reflected slower output growth and falling new orders.
The Russian Manufacturing PMI is derived from a monthly survey of 300 purchasing executives in Russian manufacturing companies which has been conducted since September 1997. Readings above 50.0 signal an increase on the previous month while readings below 50.0 signal a contraction.
Production growth in Russia's manufacturing sector was maintained for the fourth month in a row in November. However, the rate of growth continued to weaken from September's robust pace. While firms reported that new capacity had come on stream, underlying demand showed signs of faltering as the volume of new work declined for the first time in five months. Export markets remained a key source of weakness, as new export orders declined for the fourteenth month running and at the fastest rate since August.
The drop in new work enabled manufacturers to cut backlogs at a sharper rate in November. Reduced capacity pressures were also reflected in a further decline in post-production inventories, which have fallen in every month of 2009 to date.
Manufacturers increased their purchases in November. However, with output rising more slowly and new orders falling overall, the rate of growth in purchasing activity stagnated to a marginal level. Stocks of inputs subsequently fell sharply.