Russian Manufacturing Activity Sees Sharpest Decline Since Early Months of Ukraine Invasion
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Russian Manufacturing Activity Sees Sharpest Decline Since Early Months of Ukraine Invasion
The Purchasing Managers’ Index (PMI) for Russian manufacturing sank to 47.5, down from 50.2 in May. The decline not only pushed the index into negative territory, but also marked the steepest monthly drop since March 2022. S&P Global found that input cost inflation in June was the lowest since February 2020, just before the Covid-19 pandemic began.
The Purchasing Managers’ Index (PMI) for Russian manufacturing sank to 47.5, down from 50.2 in May.
Any reading below 50 indicates a contraction.
The decline not only pushed the index into negative territory, but also marked the steepest monthly drop since March 2022, when Russia was in the early phases of its full-scale war and the West hit Moscow with sweeping sanctions.
Three of the past four months have been marked by slowed business activity. Though the PMI briefly rose back into growth territory in May, it dipped again in June as new orders continued to decline.
S&P Global called the fall in orders “sustained” and noted that export demand in particular saw its sharpest drop since March 2022, partly due to the high value of the ruble.
Production has now declined for four consecutive months, with June marking the fastest rate of contraction in over two years.
Surveyed firms cited weak demand and reduced purchasing power among customers as key drivers. On the upside, reduced production and order volumes helped companies clear backlogs more quickly.
In this environment, manufacturers kept price hikes to a minimum, with June seeing the slowest pace of factory price increases since November 2022.
According to the Central Bank’s business monitoring reports, firms planned to raise prices by just 4.4-4.5% annually in the coming three months, with expectations for price growth in the manufacturing sector continuing to decline.
That helped ease pressure on companies themselves. S&P Global found that input cost inflation in June was the lowest since February 2020, just before the Covid-19 pandemic began.
Russian Manufacturing PMI Falls to Lowest Level Since April 2022
The Purchasing Managers’ Index (PMI) for Russian manufacturing fell to 48.2 in March. It was the sharpest decline since April 2022 and the first contraction since September last year. The Russian Central Bank has been predicting a sharp economic slowdown since August 2024 as the regulator started to introduce non-monetary policy methods to cool an overheated economy.
The Purchasing Managers’ Index (PMI) for Russian manufacturing fell to 48.2 in March, down from 50.2 in February — its second month of weak performance after the relatively strong 53.1 posted in January.
The Russian Central Bank has been predicting a sharp economic slowdown since August 2024 as the regulator started to introduce non-monetary policy methods to cool an overheated economy to bring down stubborn inflation that was running at 9.9% in January.
The PMI collapse signaled a renewed deterioration in operating conditions and was the sharpest decline since April 2022 and the first contraction since September last year.
However, the silver lining is that inflation probably peaked in January and may begin to fall from here, analysts at Renaissance Capital said in a note in February. However, sky-high interest rates, currently at 21%, are unlikely to be cut anytime soon, the analysts said.
The poor performance in manufacturing is mirrored in both the service sector and the combined PMI scores. In February 2025, Russia’s services sector also posted a notable deceleration in growth. The S&P Global Russia Services PMI declined to 50.5, down from January’s 54.6.
At the same time, the composite PMI, which combines manufacturing and services data, slipped to 50.4 in February from January’s 12-month high of 54.7. New services and combined PMI scores are due to be posted later this week and are expected to show similar falls to below the 50 benchmark.