The seasonally adjusted S&P Russia Manufacturing Purchasing Managers’ Index (PMI) posted 51.7 points in August 2022, above the no-change mark indicating expansion, up from 50.3 in July and showing the strongest improvement in the health of the manufacturing sector since January.

As followed by bne IntelliNews, the Russian economy seems to be doing much better than expected under Western sanctions for the military invasion of Ukraine and corporate profits remained resilient in 2Q22. PMI also remained in the black in the preceding months.

In August, Russian manufacturing firms recorded a modest improvement in operating conditions, with the upturn supported by stronger domestic demand, which drove output higher. The increase in new manufacturing sales was solid and the fastest since April 2019.

“Anecdotal evidence stated that greater new order inflows stemmed from the acquisition of new customers and stronger client demand in the domestic market,” the report said. In contrast, external sales remained in contraction territory and fell at their fastest pace since May.

Cost burdens continued to increase for Russian manufacturers in August. The rise in operating expenses eased notably from those seen earlier in the year, however, as falling costs for raw materials dampened inflationary pressures. 

At the same time, firms stated that higher selling prices were linked to efforts to pass on greater costs to clients. 

Notably, business confidence remained upbeat overall, even if softened in August. Positive sentiment was attributed to investment in marketing and hopes of stronger client demand. “That said, economic uncertainty weighed on expectations, which were weaker than the series average,” S&P report claimed.