Russia PMI October 2020

Russia: Manufacturing PMI dives to five-month low in October

The IHS Markit Russia Manufacturing PMI fell to 46.9 in October, from 48.9 in September, marking the worst reading since May. As a result, the index slid further below the critical 50-threshold, signaling that operating conditions across the Russian manufacturing deteriorated at a quicker pace at the outset of Q4.

The downturn was spearheaded by faltering output and new orders, both of which fell at the sharpest pace since May. This came against the backdrop of soaring number of new Covid-19 cases which has prompted the reintroduction of certain distancing measures and, in turn, denting client demand. Consequently, business sentiment sank to a five-month low while firms continued to shed workers at a marked rate at the outset of Q4, despite existing backlogs of work. Lastly, input costs rose at the strongest pace in over two years due to a weak ruble, which prompted manufacturers to raise output prices at the quickest pace since February 2019.

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

“Russian manufacturers lost further momentum towards recovery in October, as output and new orders contracted. The one bright spot was foreign demand which rose for the first time since December 2018. […]

Our latest forecast anticipates that the Russian manufacturing sector will remain in contraction until the second quarter of 2021, as challenging domestic demand and ongoing uncertainty regarding the pandemic are expected to weigh on the recovery.”

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