Russia: Manufacturing PMI rebounds to an over one-year high in June
The Russia IHS Markit Manufacturing PMI rebounded strongly at the end of Q2, coming in at 49.4 in June. The upturn marked a significant improvement from May’s 36.2 result and the strongest reading in over a year. That said, the index remained just below the critical 50-threshold, signaling sustained deterioration in operating conditions across the Russian manufacturing.
June’s print was chiefly driven by a rebound in both output and new orders which increased for the first time in over a year. Although still moderate overall, production growth was the strongest since April 2019 as factories reopened after lockdowns. Similarly, new business recovered thanks to reopening of customer-orientated firms, although shrinking foreign demand continued to weigh on new orders. That said, manufacturers continued to slash workforce numbers in April amid spare capacity and despite falling backlogs of work. On the price front, input cost growth eased at the end of Q2, however, firms continued to pass the cost burden onto consumers through higher output prices.
Commenting on the manufacturing sector outlook, Sian Jones, an economist at IHS Markit, said:
“The Russian manufacturing sector showed signs of a return to operations following the COVID-19 pandemic in June, as output and new orders rose for the first time in over a year […] Manufacturers showed renewed optimism towards the outlook for output over the coming year amid hopes that the worst is now behind them. Nonetheless, our current forecast signals a 7% decline in Russian industrial production on the year is expected in 2020 as challenging external demand conditions continue to weigh on new orders.”