Russia: Russian manufacturing returns to growth in June
July 1, 2016
The Russian manufacturing sector is heading into the second half of the year on the right footing. The Markit’s Manufacturing Purchasing Managers’ Index (PMI) jumped from 49.6 in May to 51.5 in June, and thus remained above the 50-threshold that distinguishes expansion from contraction in the sector. The indicator crossed the threshold for the first time in June, following six months of sub-50 readings and reached the highest level since November 2014.
According to Markit, “Russian manufacturers enjoyed one of their most prosperous months for almost two years in June, with expansions recorded in production, new order intakes and workforce numbers.” Furthermore, Markit pointed out that the increase in production reflected higher domestic demand, while foreign demand for Russian manufactured goods continued to be depressed. Markit commented that, “with backlogs also edging closer to stabilization, Russia's manufacturing sector could be set to shift into a higher level of growth over the second half of 2016.”
June’s PMI report is likely to be welcome news for Russian authorities as it gives them hopes that the economy, hit by Western sanctions and low oil prices, has finally bottomed out sooner than initially expected.
Author: Ricardo Aceves, Senior Economist