Page 43 - RusRPTJul20
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4.3 Industrial sectors and trade 4.3.1 Producers PMI
The headline seasonally adjusted IHS Markit Russia Manufacturing PMI registered bounced back in June at the end of the second quarter, recovering almost all the ground it has lost during the coronacrisis to post 49.4 at the end of the second quarter, just below the 50 no-change mark, IHS Markit said in a press release on July 1.
The June result is up from the deep contraction in manufacturing of 36.2 in May.
The manufacturing PMI plunged to 31.1 in April as Russia’s economy came to a stand still as the coronavirus (COVID-19) epidemic got underway and the country was put on lockdown. It recovered somewhat in May to 36.2, but that was still a very deep contraction.
At the same time services PMI crashed to an 18-year all time low in April to a stunning 12.2, as restaurants, hairdressers and other services simply stopped working for two months. Services bounced back in May to 36.2 as the population got used to the restrictions.
Taken together, the IHS Markit Composite PMI Output Index posted 35.0 midway through the second quarter, up from April's record low of 13.9, but was still deeply in the red.
June’s manufacturing result is encouraging as the forward looking indicator, based on interviews with hundreds of firms, suggests the worst of the crisis is over. The services index will be out in the next few days and will almost certainly show a similar bounce back, although will likely also show that services has also contracted in absolute terms.
“The latest figure signalled only a fractional decline in manufacturing sector performance, and one that was the slowest since May 2019,” Markit said in a statement.
Output and new orders has returned to growth in June after Russia’s lockdown came off at the start of the month. The renewed increase in client demand was only fractional, however, as customers gradually resumed operations following the coronavirus disease 2019 (COVID-19) outbreak, according to Markit.
Responding to the collapse in demand manufacturers had been sacking workers in the last two months, but fall in employment slowed in June as the market stabilised. However, the number of registered unemployed as risen 3.5-fold since April, according to Prime Minister Mikhail Mishustin, to 6.1%, up from around 4.4%-4.6%% in recent years.
“Despite growth in new orders, manufacturers continued to cut workforce numbers at the end of the second quarter amid signs of spare capacity and historically muted demand. Companies highlighted that redundancies and the non-replacement of employees were behind the solid fall. At the same time, backlogs of work were reduced further,” Markit said.
Business confidence has also picked up amid hopes of greater client demand
43 RUSSIA Country Report July 2020 www.intellinews.com
