Russia: Manufacturing PMI deteriorates in April
The IHS Markit manufacturing Purchasing Managers’ Index (PMI) came in at 50.4 in April, down from March’s 51.1. As a result, the index remained just above the 50-threshold signaling a continued, albeit softening, improvement in business conditions in the manufacturing sector from the previous month.
April’s result, which marked the softest reading in four months, was largely driven by a renewed decline in new business. Frail domestic customer demand underpinned the first contraction in new orders in the year-to-date, partly due to clients’ lower purchasing power amid strong inflationary pressures. Similarly, new export orders fell again at the outset of Q2. On a more positive note, manufacturing output continued to expand in April, albeit only marginally. Lastly, employment levels edged up slightly in the surveys month while inventory levels dropped as firms refrained from input buying in order to improve cash flow.
Meanwhile, cost pressures continued to build up, amid supplier delays and shortages of raw materials and components. In turn, output prices rose at the fastest pace in over six years, as firms sought to pass on greater cost burdens to clients.
Commenting on the result, Sian Jones, an economist at IHS Markit, said:
“April data saw the Russian manufacturing sector take a slight step backwards in its move towards recovery. […] Nevertheless, optimism among firms continued to prevail as hopes of economic recovery and stronger demand lifted confidence to its highest since January 2020.”