Business activity in Russian industry peaked in 4 years

One of the shops of metallurgical plant in Russia

Photo: Andrey Rudakov/Bloomberg

The manufacturing PMI survey rose for a third month in a row, but the number of jobs in Russian industry continues to decline, according to a study by Markit

By the end of October 2016, the purchasing managers ‘ index (PMI) in the manufacturing sector reached the level of 52.4 points, reported in a press release by Markit. The PMI reading does not simply remain above the critical level (50 points), above which indicates growth in business activity, but continues to grow for the third month in a row in August, the PMI was estimated at 50.8 points, and in September at 51.1 points.

According to Markit, the October increase brought the value of the PMI of manufacturing industries at the four-year high, reflecting the General improved market conditions with increased production volumes. The pace of production growth in October was the highest for 67 months, which, according to experts at Markit, reflect strong demand for Russian products.

“Manufacturers have reported a significant increase in production volumes and new orders, although the latter remains burdened by weaker demand from abroad. It is encouraging that the growth of production seems able to maintain its current solid pace, as the pace of growth of outstanding business was the fastest since August 2006,” — said Markit economist Samuel Agassi.

The increase in new orders on the domestic market in October 2016, according to Markit, was the highest for the last three years. Simultaneously, the growth of outstanding business accelerated to a maximum since August 2006.

However, the improvement is not recorded in all segments. Thus, the volume of new export orders continued to decline, extending the sequence of continuous “failures” to 35 months. Another troubling sign was the new reduction in the number of jobs. Employment in the Russian manufacturing sector shrinking for the past four months.

“The main negative in this month was the current trend of job cuts. However, if there are signs of increasing pressure on production capacity employment must return to the territory growth in the near future,” says Agassi.

On the eve, on October 31, the market research Center of the Institute for statistical studies and Economics of knowledge, HSE announcedthat they expect the business confidence index (ISP) in the industry of Russia for the first six months showed a positive trend. After six months at around -5% of IPU in October 2016 reached -4%.

In addition, on October 31 was published the report of the Ministry, whose experts, in contrast, pointed to the deterioration in industrial production and the resumption of the General decline in economic activity. Calculated by the office of seasonally adjusted industrial production index after recorded in August of growth (+0.3% against July) once again came in negative (-0,2%).

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