Russia: Business conditions in manufacturing sector deteriorate at the outset of Q3
August 3, 2015
The manufacturing Purchasing Managers’ Index (PMI) elaborated by Markit fell in July, losing the ground gained in June. The indicator slipped from 48.7 in June to 48.3 in July. Consequently, the PMI continued to hover below the 50-threshold that separates contraction from expansion in business conditions in the manufacturing sector.
Markit stated that operating conditions in Russia’s manufacturing sector continued to deteriorate in July, which mainly reflect weak domestic demand as a result of the ongoing recession in the country. July’s survey showed that manufacturing output contracted for the third consecutive month. A similar trend was observed in new orders, as respondents to the survey indicated that, “demand for their products remained soft at a time when the economic climate remained challenging.” July’s fall in the overall PMI index also reflected declines in orders from abroad, volumes of outstanding business, a drop in purchases due to a lack in incoming work. Regarding price developments, July’s survey showed that panelists highlighted a marked acceleration in the increase of average prices for inputs.
Regarding the recent developments, Markit concluded: “A similar story at the start of the third quarter to the one told earlier in the year: the Russian manufacturing sector continues to broadly stagnate, dragged down by weakness in the capital goods category which is offsetting marginal growth in the consumer and intermediate goods areas.”
Author: Ricardo Aceves, Senior Economist