Russia: Manufacturing PMI falls to near two-year low in March
The S&P Global Manufacturing Purchasing Managers’ Index (PMI) came in at 44.1 in March, down from February’s 48.6. March’s result marked the weakest reading since the early stages of the Covid-19 pandemic in May 2020. Consequently, the index fell further below the 50.0 no-change threshold, signaling a sharper deterioration in business conditions compared to the previous month.
The downturn in March chiefly reflected an accelerating decline in manufacturing output. Weak client demand, especially from abroad, and shrinking new orders drove the sharpest decline in production in nearly two years, amid the increasingly negative economic impact of the war in Ukraine and associated international sanctions. As a result, both pre- and post-production inventories shrank considerably, and backlogs of work declined in March.
Turning to the inflationary backdrop, input prices soared at the fastest pace on record, mostly on the back of rising supplier costs, deteriorating vendor performance and a weak ruble, in turn prompting manufacturers to raise their selling prices at the fastest pace since the series began back in January 2003. Lastly, the outlook for output over the coming year dived to a 22-month low in March, albeit remained in optimistic territory, pointing to still-positive sentiment among manufacturing firms.
Against the backdrop of Russia’s invasion of Ukraine and associated international sanctions, FocusEconomics panelists are currently taking the latest developments into account and continue to revise their forecasts accordingly. Currently, the Consensus sees fixed investment falling 20.6% in 2022, which is down 14.2 percentage points from last month’s projection. For 2023, panelists see fixed investment falling 2.7%.