Russia’s manufacturing PMI strengthened again in September posting 51.9 over the 50 no-change mark, which was up slightly from the 51.6 posted in August. The result is consistent with Russia’s ongoing economic recovery, which remains fragile.

September survey data signalled a further improvement in operating conditions in the Russian manufacturing sector. The overall growth performance was driven by solid expansions in output and new orders, and the first increase in exports since August 2013.

The sustained upturn in production was also a key factor behind the return of job creation, with staffing levels rising for the first time in seven months. Survey data for the third quarter as a whole signalled moderate growth in the manufacturing sector, and at a stronger rate than was seen in the second quarter.

New orders received by manufacturing firms continued to rise in September, growing at a solid rate that was in line with that seen in August.

Goods producers reported a steep rise in cost burdens. The pace of input price inflation accelerated to reach a ten-month high, with panellists stating that average prices were driven up by higher raw material costs and supplier shortages. This was further evidenced by vendor performance, which continued to deteriorate. Similarly, average charges increased to reflect larger cost burdens. Furthermore, output price inflation was the fastest in 2017 so far.

Business confidence picked up in September. Notably, the degree of optimism was the most robust since May 2015. Panellists largely linked positive sentiment to improved market conditions.

Commenting on the Russia Manufacturing PMI survey data, Sian Jones, economist at IHS Markit, which compiles the survey, said: “The Russian manufacturing sector appears to have regained some strength in the third quarter, following weaker growth momentum in the three months to June. Sustained expansions in output and new orders were key drivers behind the return of job creation. Meanwhile, new export orders increased for the first time since August 2013. 

“September survey data indicated greater inflationary pressures, with supplier shortages and higher raw material prices pushing cost burdens up steeply. Factory gate charges also rose in response to increased input costs. Boding well for future performance, confidence among Russian goods producers towards output prospects in the year ahead improved, with the degree of optimism reaching a 28-month high,” Jones added.