Russia’s manufacturing sector contracted in June, albeit at a softer pace, as output grew for the first time in a year, survey data from IHS Markit showed on Wednesday.
The Manufacturing Purchasing Managers’ Index, or PMI, rose to 49.4 in June from 36.2 in May. This was the slowest decline since May 2019. Any reading below 50 indicates contraction in the sector.
Output increased for the first time since May 2019, due to the processing of orders made before the pandemic. New orders rose fractionally and increase in client demand was led by the reopening of customer [business][1].
New business from abroad continued to decline sharply in June, though the pace of contraction was the softest in three months.
Number of workforce were reduced in the mid of the year amid signs of spare capacity and muted demand. Backlogs of work decreased.
On the price front, input cost increased at a stronger rate and cost burden eased in June. Inflation rate softened at a marginal pace.
Both pre- and post-production inventories depleted further in June as companies used stocks to fulfill new orders and backlogs of work.
“Manufacturers showed renewed optimism towards the outlook for output over the coming year amid hopes that the worst is now behind them,” Sian Jones, Economist at IHS Markit said.
“Nonetheless, our current forecast signals a 7% decline in Russian industrial production on the year is expected in 2020 as challenging external demand conditions continue to weigh on new orders.
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