Russia: Sliding PMI points to sharpest contraction in manufacturing activity in over a decade in November
The manufacturing Purchasing Managers’ Index (PMI) produced by IHS Markit fell to an over one-decade low of 45.6 in November, from 47.2 in October. As a result, the index slid further below the critical 50-threshold, signaling that activity in the manufacturing sector contracted for the seventh consecutive month in November.
November’s downturn chiefly reflected deteriorating demand. New business fell at the sharpest rate since March 2009, as both domestic and foreign customers were hesitant to place new orders. Faltering client demand and a shrinking customer base were principally behind another contraction in output, which worsened in November and was among the sharpest declines in over a decade. In turn, firms cut their workforce numbers and saw their backlogs of work fall considerably in November. Adding to the stream of negative news, sentiment regarding future output growth plunged in the surveyed month, although it remained in positive territory. On the price front, inflationary pressures continued retreating in November and were the weakest since February 2017, with firms mildly raising their output prices.
Commenting on the report, Sian Jones, an economist at IHS Markit, highlighted the downbeat short-term outlook for Russia’s industrial sector:
“Russian manufacturing firms continued to highlight challenging domestic and foreign demand conditions, with the sector recording its worst performance since May 2009 in November. […] “Our current industrial production forecast points towards a slowdown in output in the final quarter of 2019 and during the opening months of 2020 as muted domestic consumer spending is expected to weigh on the expansion.”