Russia's manufacturing Purchasing Managers' Index (PMI) showed some growth in October, while both output and new orders for Russian manufacturing producers eased and overall performance was the weakest since June, according to the IHS Markit report, published on November 1.

Russia's ongoing economic recovery is still uneven, at least on the output side, with most hopes placed on consumption reaching the ambitious goal of over 2% short-term GDP growth. 

In October Markit Russia Manufacturing Purchasing Managers’ Index posted 51.1, down slightly from September’s 51.9, but still above the no-change mark of 50.0 indicating expansion in the sector. 

“The latest survey data signalled a softer start to the final quarter of 2017," Markit economist Sian Jones commented, adding that “October’s survey showed a reduction in pressure on production capacity, indicating a second consecutive month of backlog depletion." 

Despite slipping in October, the indicator extended the current upturn to 15 consecutive months, the longest sequence of growth seen since June 2011.

"The upturn was supported by sustained, albeit slower, growth in output and new orders," Markit report commented. The report also claimed that export business increased, and at a stronger pace, despite the continuous sanctions regime.

However, price inflation accelerated to a marked rate that was the fastest seen since July 2016. "A number of survey members noted that the increase was due to exchange rate fluctuations and higher supplier prices," according to the report.

Business confidence among Russian manufacturers on future output remained robust, despite falling slightly from September. Anecdotal evidence suggested that optimism was linked to planned investment and larger client bases.

At the same time VTB Capital bank on November 1 questioned the precision of the PMI reports in a technical brief entitled "Is PMI a lagging, noisy, small sample version of Rosstat's confidence index?"

Although the PMI is a leading indicator of economic activity, followed with the same intensity as core macro indicators such as inflation, VTB argues that PMI surveys cover a narrow class of economic activity and is based on a thinner sample.

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