Russia PMI July 2020

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Russia: Manufacturing PMI dips in July

August 3, 2020

The Russia IHS Markit Manufacturing PMI fell to 48.4, from 49.4 in June. The deterioration contrasted June’s notable improvement which had marked the strongest reading in over a year. As a result, the index slipped further below the critical 50-threshold, signaling worsening operating conditions in the Russian manufacturing sector.

July’s deterioration chiefly reflected faltering demand conditions. Despite easing social distancing measures, the demand backdrop worsened at the outset of Q3, as clients abroad and at home were hesitant to place new orders amid lingering uncertainty. This contrasted a sustained increase in production, as companies continued to ramp up output following the lifting of lockdown measures. Meanwhile, manufacturers reduced their workforce numbers further in July, chiefly due to spare capacity

and drying new order inflows. With regards to prices, shortages of raw materials and a weaker ruble pushed input costs higher, while output prices remained broadly stable. On a more positive note, sentiment picked up to a six-month high on hopes of a return to pre-pandemic output levels over the long term.

Commenting on the manufacturing sector outlook, Sian Jones, an economist at IHS Markit, said:

"The Russian manufacturing sector took a step back in July, as new orders struggled to maintain momentum. Although output expanded, manufacturing sales fell back into contraction […]. While it is encouraging to see confidence improving among goods producers, our latest forecast is a 6.4% annual contraction in industrial production in 2020 and a slow recovery in output to pre-pandemic levels."

FocusEconomics Consensus Forecast panelists project fixed investment will plunge 9.2% in 2020, which is unchanged from last month’s forecast. In 2021, the panel sees fixed investment growing 5.1%.


Author:, Economist

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Russia PMI Manufacturing July 20 20 0

Note: IHS Markit Manufacturing Purchasing Managers’ Index (PMI). Readings above 50 indicate an overall increase compared to the previous month, and below 50 an overall decrease.
Source: IHS Markit.


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