Russia Manufacturing Returns to Contraction

Russia’s S&P Global Manufacturing PMI fell to 48.8 in August from July’s 18-month high of 50.7, marking the first contraction in the sector in three months. The contraction was driven by decreases in production and new orders, while employment and stock levels contracted further. Output shrank for the first time since April, albeit at a marginal pace, linked to lower new orders. The modest decrease in new orders was due to weak client demand, with foreign sales recording the second-fastest drop since last September. Firms recorded a renewed fall in input buying, while supplier delivery times lengthened the most since December 2024 due to logistics issues and fuel shortages. On the price front, both input and output cost inflation accelerated to seven-month highs, due to higher fuel and imported goods prices. Looking ahead, business sentiment improved amid hopes of strengthening demand conditions and increased investment in advertising.

Russia’s S&P Global Manufacturing PMI rose to 50.7 in July from 50.3 in June, signaling the strongest improvement in factory activity since January 2025. Output expanded at the quickest pace since January 2025, while new orders grew at the fastest rate since May 2025, supported by stronger domestic demand. Meanwhile, new export orders fell at the sharpest pace since October 2022. Employment declined further as firms continued not to replace voluntary leavers, though the pace of job shedding eased to a four-month low. Input cost and selling price inflation accelerated, as fuel shortages, transportation issues, and higher supplier costs pushed input cost inflation to its fastest pace since January 2026. Supplier delivery times lengthened to the greatest extent since February 2025 amid logistics disruptions, while firms increased purchasing activity to replenish stocks. Business confidence fell to its lowest level since May 2020 amid customer uncertainty and intensifying competition.

Russia’s S&P Global Manufacturing PMI rose to 50.3 in June from 48.8 in May, signaling the first improvement in factory activity in over a year and the strongest operating conditions since January 2025. Output expanded at the fastest pace since January 2025, while new orders stabilized after 12 months of decline. Meanwhile, new export orders fell at the sharpest rate since September 2025. Employment declined further as firms did not replace voluntary leavers, though the pace of job shedding eased markedly from May's record. On prices, both input cost and selling price inflation softened, despite supplier delivery times lengthening to the greatest extent since January 2026 due to logistics disruptions and import challenges following the war in the Middle East. Purchasing activity increased as firms prepared for stronger demand. Lastly, sentiment weakened to a three-month low amid concerns over customers' purchasing power, despite expectations for higher output over the coming year.