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Russian manufacturing shrinks in Feb as new orders fall – PMI

Randy Mancini 2 Mar 1
An employee walks through an assembly line of the Aurus manufacturing plant in Yelabuga
An employee walks through an assembly line of the Aurus manufacturing plant in the town of Yelabuga in the Republic of Tatarstan, Russia May 31, 2021. REUTERS/Alexey Nasyrov/Files

March 1, 2022

(Reuters) – Russian manufacturing activity shrank in February as new orders fell for the first time in six months as businesses felt the impact of the COVID-19 pandemic, a survey showed on Tuesday.

The Markit Purchasing Managers’ Index (PMI) fell to 48.6 in February from 51.8 in the previous month, slipping below the 50.0 mark that separates expansion from contraction for the first time since September.

“Weak market demand conditions and the ongoing impact of the pandemic led to the first declines in output and new orders since August 2021, both of which were solid overall,” said Sian Jones, a senior economist at IHS Markit, which compiles the survey.

New export orders declined at the steepest pace in four months, while inflationary pressures intensified as supplier costs increased and logistics issues continued to hamper supplier deliveries, the monthly survey showed.

Russian manufacturers also recorded the steepest decline in employment since August 2021, according to the survey which did not mention the Russian attack on Ukraine that took place on Feb. 24 and triggered harsh economic sanctions against Moscow and the Russian central bank.

“Nonetheless, manufacturers remained upbeat regarding the outlook for output over the coming year. Optimism was not dampened by current subdued demand and ongoing headwinds, and reached its highest level since August 2019,” Jones said.

Russia calls its actions in Ukraine a “special operation” that it says is not designed to occupy territory but to destroy its southern neighbour’s military capabilities and capture what it regards as dangerous nationalists.

(Reporting by Reuters; Editing by Susan Fenton)