Russia’s manufacturing sector contracts slightly in May; PMI index rises to 49.6

Russia’s manufacturing sector’s operating conditions deteriorated further in May. New order intakes mainly led to the contraction. Markit Russia Purchasing Managers’ Index rose from April’s 48 to 49.6 in May, remaining in the contraction territory. The recent figure continues to hint at contraction in the country’s manufacturing sector, continuing with the trend seen since December 2015. However, the overall downturn is just marginal with production levels returning to growth territory and job creation seen for the first time in 35 months, said Markit.

New order intakes in May were a drag on growth. New orders have now declined for three consecutive months; however, the recent decline was marginal. Furthermore, the total new work contracted and was broad-based, while new export orders also registered a fall. Producers in Russia recorded a growth in their output levels in May, following a drop in prior two months. However, the pace of expansion was marginal and more subdued than the long-run average.

The Russian manufacturing sector registered job creation for the first time in 35 months in May. However, the pace of hiring employees was marginal. The recent survey data hinted at the first growth in purchasing activity at Russia’s goods producers for four months. Furthermore, the growth in May was the sharpest in 18 months in spite of being relatively marginal, said Markit.

Meanwhile, pre-production inventories fell again in May in spite of a rise in input buying. According to the panellists, the decline in inventory holdings is due to lower volume of new orders. Russia’s goods manufacturers increased their output charges for the tenth straight month, mainly due to a rise in average costs burdens.