Russia: Manufacturing PMI signals expansion in activity in January
The IHS Markit Russia Manufacturing PMI rose to 50.9 in January from 49.7 in December, marking the best reading in five months. As a result, the index moved above the critical 50-threshold, pointing to the first improvement in operating conditions across the Russian manufacturing since August 2020.
January’s improvement was spearheaded by a rebound in both output and new orders. Production rose for the first time since September 2020, bolstered by firmer client demand and a recovery in new business as clients moved forward with orders previously placed on hold due to the pandemic. New order growth was the strongest since August 2020 and came on the back of healthier domestic demand which more than offset plunging export orders which contracted at the sharpest pace since May 2020. Against this backdrop, firms increased their workforces at the joint-sharpest rate since March 2019 which allowed them to further reduce backlogs of work.
With regards to prices, the rate of cost inflation remained elevated in January, chiefly due to worsening supply disruptions. In turn, output prices at the second-fastest pace in nearly two years as manufacturers sought to pass on higher supplier price. Meanwhile, business sentiment inched down in January due to pandemic-related concerns.
Commenting on prices, Sian Jones, an economist at IHS Markit, said:
“Supply chain disruptions once again pushed up input prices, as raw material shortages put pressure on supplier capacity. Nonetheless, overall cost inflation in the manufacturing sector eased at the start of the year, which is in line with forecasts from the Central Bank of Russia that anticipate weaker inflationary pressures as 2021 progresses”.