Russia’s manufacturing PMI slips in October, inflation and labour pressures strong

Russia’s manufacturing PMI slips in October, inflation and labour pressures strong
Improving Russian PMI. / bne IntelliNews
By bne IntelliNews November 2, 2023

Operating conditions at Russian manufacturing firms improved at a solid pace in October, albeit slower than in September and amid sharp cost inflation pressure, according to the latest report from 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 continued to trend in positive territory.

The seasonally adjusted S&P Global Russia Manufacturing Purchasing Managers’ Index (PMI) posted 53.8 in October, above the 53.8 no-change mark indicating expansion, although down slightly from 54.5 in September.

The upturn stemmed from stronger expansions in output and new orders, driven by domestic demand amid only fractional growth in new export orders. The pace of increase in new sales accelerated for the third month running to the sharpest since March 2011. 

“Greater new order inflows were attributed to successful import substitution, the acquisition of new customers and stronger demand conditions,” according to S&P.

Growth in new order inflows led to a renewed rise in backlogs of work in October, with the capacity pressure further pressuring employment. “That said, the rate of job creation eased to the second-slowest in eight months amid challenges finding suitable candidates,” S&P said, confirming reports of acute labour shortages in Russian industry. 

“On the price front, input costs faced by goods producers continued to increase at a marked pace,” the report warned, noting that weak ruble versus the US dollar, higher transportation charges and greater supplier prices pushed up operating expenses.

As covered by bne IntelliNews, the inflation expectations of enterprises continued to rise for the fourth month in a row, in October the indicator added 0.3 percentage points and reached 24.3%.

Indeed, the uptick in cost burdens led to the manufacturing firms registering a marked rise in selling prices, according to the S&P PMI report.

Still, the confidence in the manufacturing sector remained solid, buoyed by stronger demand conditions and output expectations, planned investment in new machinery, product development and capacity expansion.

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Data

Kazakhstan's November services PMI shows first contraction in eight months

Despite lapse in demand, firms said to retain positive attitude on 12-month outlook for activity, which remained historically elevated. Inflationary pressures continued to retreat.

Industrial prices in Romania resume growth in September-October as energy prices remain elevated

Industrial prices in Romania increased by 2.4% in September-October.

Slovak GDP grew by 1.1% y/y in Q3

GDP also up by 0.2% quarter-on-quarter as trade surplus makes up for lower domestic demand.

Russia’s services PMI posts 52.2 in November as growth cools, but remains comfortably in the black

Russian service providers recorded a modest expansion in business activity during November, according to the latest PMI survey from S&P Global, but the rate of growth slowed somewhat from October.

Employment in Romania up 1.3% y/y in Q3

Largest number of jobs created in construction, IT&C and hospitality sectors.

Kazakhstan's November services PMI shows first contraction in eight months
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Industrial prices in Romania resume growth in September-October as energy prices remain elevated
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Employment in Romania up 1.3% y/y in Q3
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