Russia’s manufacturing PMI continued to trend in positive territory in June 2023 amid stable demand and sustained total sales, albeit the upturn slowed slightly from May following softer expansions, according to the latest report by S&P Global. (chart)

As followed by bne IntelliNews, despite the fallout from Russia's full-scale military invasion of Ukraine, the manufacturing sector ended 2022 with a historically strong expansion in output. Manufacturing PMI since January 2023 has continued to trend in positive territory.

The seasonally adjusted S&P Global Russia Manufacturing Purchasing Managers’ Index™ (PMI) posted 52.6 at the end June, down from 53.5 in May, but still above the 50.0 no-change mark indicating expansion.

The report says that production continued to expand in June, as Russian manufacturers registered an eleventh successive monthly upturn in output. Increases were often linked to greater new order and new client inflows. 

New orders growth was supported by sustained improvements in domestic demand, but, notably, alongside a renewed increase in new sales to external markets. “Import substitution, the diversification of export markets and investment in finding new customers reportedly sparked the latest expansion in new orders,” according to S&P.

At the same time, price pressures softened slightly in June, but input costs continued to rise at a marked pace, as goods producers registered the second-sharpest increase in operating expenses since April 2022. 

“Higher cost burdens were often attributed to unfavourable exchange rate movements, material shortages and supplier price hikes,” according to the PMI report.

Business confidence among Russian goods producers remained upbeat, as firms recorded a strong degree of optimism in the outlook for output over the coming year. “Positive sentiment was reportedly underpinned by planned investment in new product ranges, hopes of stronger client demand and expansion into new export markets,” S&P writes.