Page 41 - RusRPTMar21

4.3 Industrial sectors and trade 4.3.1 Producers PMI
The headline seasonally adjusted IHS Markit Russia Manufacturing PMI put in its strongest growth since April 2019 after registered 51.5 in February, up from 50.9 in January, signalling a marginal improvement in the health of the Russian manufacturing sector in the last month.
“February PMI data signalled a second successive monthly improvement in operating conditions across the Russian manufacturing sector. The overall upturn was supported by quicker expansion in output and new orders amid stronger client demand. Exports, however, continued to fall due to challenging external demand conditions. The headline figure was buoyed by the greatest rise in employment for over two years. Business confidence also strengthened in February and was back to levels last seen before the coronavirus disease 2019 (COVID-19) pandemic,” Markit said in a note.
Russia is emerging from an annus horribilis after its economy was less damaged by the multiple shocks it received in 2020. GDP contraction was limited to 3.9%, in defiance of predictions of as much as a 6% fall earlier in the year.
However, growth is not expected to return until the second quarter of this year and businesses, while a lot more confident, as still facing difficulties.
Supply chain pressure worsened markedly in February according to Markit’s panel, and resulted in a quicker rate of input cost inflation. Firms were able to partially pass on higher input prices to clients through the fastest increase in charges for six years.
One of the more unpleasant consequences of the coronacrisis has been a resurgence in inflation, which rose to 5.2% in January, well above the CBR’s 4% target rate. CBR governor Elvira Nabiullina attended the policy meeting in January wearing a “full stop” broach – she has taken to wearing broaches at her press conferences that indicate the CBR policy – and the full stop broach clearly said there will be no more growth inducing rate cuts for the meantime.
But after a year of being locked up at home businesses are starting to go back to work. Russia has the benefit of high infection rates and started its mass roll out of vaccinations in December and so is well ahead of the rest of the world on the path to a return to normalcy.
“Contributing to the overall expansion was a faster rise in production at goods producers midway through the first quarter. The solid upturn was the steepest
41 RUSSIA Country Report March 2021 www.intellinews.com