Russia's manufacturing PMI on decline in February ahead of Ukraine invasion

Russia's manufacturing PMI on decline in February ahead of Ukraine invasion
Russia's manufacturing PMI took a tumble in February changing from expansion to contraction, posting 48.6 / bne IntelliNews
By bne IntelliNews March 2, 2022

Russia's goods manufacturers indicated a renewed decline in the health of the sector in February 2022, according to the latest release of the Purchasing Managers Index compiled by IHS Markit.

As reported by bne IntelliNews, Russian goods producers registered a marginal improvement in the health of the sector at the start of 2022. But in February, the headline seasonally adjusted IHS Markit Russia Manufacturing PMI registered 48.6, down from 51.8 in January, and below the no-change 50.0 mark, indicating contraction.

However, most of the indicators relying on data collected before the Russian military sanctions on February 24 for now are largely irrelevant due to the deep shock experienced by the Russian economy resulting from an avalanche of Western sanctions.

Even before the invasion, in February manufacturing operating conditions deteriorated modestly and at the fastest pace since August 2021 as output and new orders fell for the first time in six months, IHS Markit wrote.

Lower new sales reflected weaker domestic and foreign client demand, while the manufacturers saw a fall in workforce numbers as pressure on capacity dropped. At the same time, inflationary pressures intensified as the rate of input price and output charge inflation accelerated to the fastest for eight months amid hikes in supplier costs.

Still, prior to the invasion of Ukraine Russian goods producers were more upbeat regarding the outlook for output over the coming year midway through the opening quarter. The degree of confidence was the strongest since August 2019 amid hopes of upticks in client demand and investment in new technology and production processes.

Siân Jones, senior economist at IHS Markit, commented that February (pre-invasion) data supports IHS Markit's forecast of industrial production expanding 6.6% in 2022.