Russia’s manufacturing sector contracted slightly in September as weak demand drove further declines in output and new orders, according to a business survey released on Thursday. The seasonally adjusted S&P Global Russia Manufacturing Purchasing Managers’ Index (PMI) rose to 49.8 in September from 48.8 in August. The 50-mark separates growth from contraction, keeping the sector in a downturn for the second consecutive month.
Output and New Orders Decline Across Russian Factories
Factory output fell for a second straight month in September, though the pace of the decline eased from August. Firms surveyed by S&P Global linked the lower production levels to weak demand and softer inflows of new orders. Total new orders dropped for the second month running, with companies pointing to higher prices and competition as primary drivers. Export orders experienced an even steeper slide, dropping for the 11th consecutive month at the sharpest pace recorded since May 2022, as reported by Gleb Bryanski.
Employment Levels and Cost Pressures
Employment figures declined for the 10th straight month, with the pace of job shedding reaching its fastest rate since May. Manufacturers frequently attributed the lower headcounts to the non-replacement of voluntary leavers. Meanwhile, cost pressures remained marked but eased to a three-month low. Output price inflation similarly slowed, hitting its weakest level since June. Supply chain disruptions persisted as supplier delivery times lengthened to the greatest extent since October 2024, driven by transportation delays and logistics issues.
Business Optimism for the Year Ahead
Despite ongoing contractions in output and employment, Russian manufacturers expressed greater optimism regarding the year-ahead outlook in September. Business optimism climbed to a three-month high, supported by hopes for stronger demand and new customers. However, overall confidence across the sector remained below the series average.
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