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Manufacturing upturn continues to strengthen in Russia

Staff Writer | December 30, 2016
Russia’s manufacturing upturn continued to strengthen in December. The improvement in the sector’s health was driven by substantial increases in production and new orders, while job creation was at its quickest since March 2011.
Manufacturing in Russia
Russia   Markit Russia Manufacturing PMI
However, goods producers continued to reduce their inventory holdings while backlogs of work broadly stabilised. The seasonally adjusted Markit Russia Manufacturing Purchasing Managers’ Index (PMI) rose to a 69-month high of 53.7 in December.

Up fractionally from November’s 53.6, the latest reading thereby signalled a solid improvement in operating conditions in Russia’s manufacturing sector. Moreover, the average PMI for the fourth quarter (53.2) was the strongest for over five-andhalf years.

Russian goods producers raised their production at a substantial pace during December. Although the rate of increase eased slightly from November’s 68- month high, it continued to outstrip the historical average. At the sub-sector level, the sharpest rate of output growth was seen at investment goods firms.

In line with the trend for output, new business growth was evident in Russia’s manufacturing rate of expansion eased from November’s multiyear high but was still one of the strongest reported since the start of 2013.

The rise in total new work was restricted to the domestic market, as firms reported a fall in new business from abroad.

However, the rate of decline in new export orders was the slowest in 40 months and only slight overall. Higher new order levels were cited by firms as the main factor behind a rise in workforce numbers in December.

In fact, jobs growth was the sharpest for over five-and-a-half years. Backlogs of work, meanwhile, edged closer to stabilisation. Latest survey data pointed to a further solid increase in purchasing activity at Russian manufacturing firms in December.

The rate at which input buying rose was unchanged from November’s 68-month high, with firms attributing this to stronger output growth.

Meanwhile, Russian goods producers continued to report a fall in their pre- and post- production inventories during December. However, the respective rates of decline eased since the previous month.