Russia's manufacturing sector saw no change with regards to its overall performance in September according to the latest PMI index report, while "overall stagnation did however mask a return to growth of both output and new orders," IHS Markit said on October 1.

In August the manufacturing PMI was slightly up, but still remained in red, helped out again by the service sector that posted three-month high index and lifted the composite output index.

In September, the IHS Markit Russia Manufacturing Purchasing Managers’ Index (PMI) went up further to 50.0 from 48.9 seen in in August, remaining on the no-change 50.0 mark which signals no change in operating conditions across the Russian manufacturing sector and ending a four-month sequence of contraction.

For the first time since June, output levels at Russian manufacturers rose in September, Markit noted, while adding that the increase in production was only fractional and well below the series trend. The upturn was attributed by the panellists to new order growth. Some, however, still highlighted concerns surrounding weaker market demand due in part to an unfavourable exchange rate. 

"Currency movements were again stated as a factor behind fragile demand conditions," according to the report. At the same time, manufacturing firms reported a solid rise in new business from abroad that was the fastest since April, although this was not linked particularly to currency fluctuations by Markit.

Unfavourable exchange rate was also behind the increased price pressures, pushing up imported purchase prices, according to anecdotal evidence. "Despite fragile demand conditions, firms raised their factory gate charges sharply in September, and at the quickest rate for five months," September PMI report finds.

"Such inflationary and exchange rate pressures were highlighted by the Central Bank of Russia as key factors behind the unexpected interest rate rise in September," Markit economist Sian Jones reminds.

Notably, Russian manufacturing firms signalled a robust degree of confidence regarding the year-ahead outlook for output, linked in part to greater foreign client demand and new product development. The level of optimism was the highest since May 2013.