Russia PMI March 2020

Russia: Manufacturing PMI falls in March as confidence hits record-low

The Russia IHS Markit Manufacturing PMI edged down to a three-month low of 47.5 in March, from 48.2 in February. As a result, the index edged further below the critical 50-threshold, suggesting that activity in the manufacturing sector contracted for a tenth month running in February.

The weaker reading was largely driven by sharper contractions in both new orders and output. The downturn came against the backdrop of softening external and domestic client demand, largely due to the increasing impact of the Covid-19 pandemic. In turn, sliding new orders led to shrinking backlogs of work, although the pace of contraction in employment softened from the previous month. Notably, business sentiment dived to a series-low level amid soaring fears of an imminent economic recession due to the coronavirus pandemic. On the price front, shortages of raw materials boosted inflationary pressures, with firms raising accordingly.

Commenting on the report, Sian Jones, an economist at IHS Markit, noted:

“The Russian manufacturing sector remained in contraction in March, as the impact of the outbreak of COVID-19 began to emerge in global supply chains and external demand conditions […] Uncertainty regarding the strength of the global economy and future demand weighed heavy on manufacturers’ minds as business confidence sank to a series low. Our current forecast for industrial production indicates a contraction in year-on-year terms in the first quarter of 2020, with the decline accelerating through to the latter stages of the year.”

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