Russia PMI July 2016


Manufacturing takes a hit in July

Following two months of improvement, Russia’s manufacturing sector took a hard hit in July. The Manufacturing Purchasing Managers’ Index (PMI) elaborated by IHS Markit dropped from 51.5 in June to 49.5 in July and thus brought the indicator back below the 50-threshold that distinguishes expansion from contraction in the sector.

In a press release, IHS Markit commented that the downturn in the sector was mainly driven by a decline in new orders, both domestically and from abroad. Manufacturing production continued to increase in July, although at a slower pace than in June. Moreover, backlogs of work accumulated for the first time since January 2013. IHS Markit also said that, despite an increase in production, Russian manufacturers had reduced their staff, ending two consecutive months of job growth. Regarding price developments, the survey showed that Russian goods producers increased their output prices as pressure on input prices intensified.

According to IHS Markit, “Deteriorating demand conditions continued to weigh on the economic performance of Russian manufacturers during July. The headline figure again slipped below the 50.0 no-change mark after declines in total new orders were reported. This contraction led to an easing of production growth and job cuts across the sector.”

Following the economy’s collapse in 2015, analysts surveyed by FocusEconomics expect the Russian economy to continue contracting in 2016, although at a more moderate pace. FocusEconomics Consensus Forecast panelists project that Russia’s GDP will fall 1.1% in 2016, which is up 0.2 percentage points from last month’s forecast. Panelists expect the economy to expand 1.3% in 2017.

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Russia PMI Chart

Russia PMI Manufacturing July 2016

Note: IHS Markit Manufacturing Purchasing Managers’ Index (PMI). A reading above 50 indicates an expansion in business activity while a value below 50 points to a contraction.
Source: IHS Markit.

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