Russia’s Purchasing Managers Index In Fastest Rise Since 2017

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Russian business recovery 6% higher than European Union

Russian manufacturing firms recorded their fastest rate of growth last month in almost six years due to new export orders and increased demand from domestic customers, according to a business survey published on Thursday (December 1) by S&P Global.

Despite Western sanctions imposed on Russia over its invasion of Ukraine, “firms expanded their input buying at the fastest pace since January 2017,” S&P Global said.

The seasonally adjusted S&P Global Russia Manufacturing Purchasing Managers’ Index rose in November to 53.2 from 50.7 in October.

“Greater new sales spurred renewed increases in employment and inventories, with input buying expanding at a steep rate,” the report said.

According to the survey, firms also expanded their workforce numbers last month — in contrast with an October decline after Russian President Vladimir Putin announced a “partial mobilization” to draft 300,000 reservists for the war in Ukraine.

Western sanctions imposed on Moscow over the war in Ukraine have helped tip Russia into a recession, with the economy shrinking 1.7% in the first nine months of the year.

The very strong PMI result, where any result above the no-change 50 benchmark is an expansion, is the latest in a slew of encouraging economic statistics. Forecasters have been improving their outlook for the Russian economy all year as predictions went from a 15% contraction projected in January to the latest forecasts of under 3%.

The Russian result is also strikingly better than the European average, which is still contracting. From the perspective of PMIs, sanctions have done more harm to Europe than they have to Russia.

“The eurozone manufacturing PMI rose to 47.1 in November. This corroborates our view that manufacturing is headed for a winter recession but tentatively suggests we may now be past peak weakness,” Riccardo Marcelli Fabiani, an economist with Oxford Economics, said in an accompanying note.

“While the rise is good news, the details of the survey temper optimism due to falling production levels, as well as deteriorating orders. Moreover, high stock levels will drag down activity once the restocking process is complete.” Fabiani added.

The news comes on top of the latest RosStat release that revealed Russia’s basic sector output fell by only 3.2% year on year in October, an improvement from the 3.5% drop in September, and output was down just 1.1% y/y in 10m22.

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