Russia: Manufacturing PMI ticks down in March
April 1, 2021
The IHS Markit Russia Manufacturing PMI edged down to 51.1 in March, from 51.5 in February which had marked the best reading since April 2019. That said, the index remained above the critical 50-threshold, signaling a soft improvement in operating conditions across the Russian manufacturing sector at the end of Q1.
March’s weaker reading was chiefly driven by softer growth in both output and new orders. New business rose at the softest pace in three months amid continued decrease in foreign export orders and cooling domestic demand. Notably, softer new order growth led to a further decline in backlogs of work. Meanwhile, supply chain disruptions, raw material shortages and soaring input costs dented manufacturing production growth, thus weighing on the overall result.
In response to continued increase in input costs, firms raised their output charges at the second-sharpest pace in over six years in March. Lastly, despite easing from February’s over one-year high, business sentiment remained upbeat, on expectations of rising client demand and investment activity ahead.
Commenting on the result, Sian Jones, an economist at IHS Markit, highlighted rising cost pressures:
"Price hikes and supply shortages constrained production, whilst softer client demand weighed on the increase in new orders. Strain on global supply chains pushed input costs up once again and at a marked pace. Although firms increased their selling prices at a slower rate, it was nonetheless among the fastest for six years in an effort to partially pass on soaring costs. Further historically elevated rates of inflation in March add to concern regarding building price pressures through 2021 to date by the Central Bank of Russia."
Author: Almanas Stanapedis, Research Team Manager