Page 45 - RusRPTSept21

4.3 Industrial sectors and trade 4.3.1 Producers PMI
Russia’s seasonally adjusted IHS Markit Russia Manufacturing PMI index posted 46.5 in August, down from 47.5 in July, the third successive monthly deterioration in operating conditions across the Russian manufacturing sector. The decline in the health of the sector was the biggest since November 2020 and any result less than the 50 no-change mark represents a contraction.
The fall in the manufacturing PMI is likely to drag the composite PMI down to around the 50 mark from the 51.7 it posted in July. Services continue to expand, posting 53.5 in July but the service PMI has also been slowing in recent months.
The low base effects caused by last year’s lockdowns have almost entirely worn off. The economy ground to an almost standstill between April and July when the restrictions were lifted and economic activity bounced back at the end of the summer in 2020 to almost pre-crisis levels.
However, the underlying economic activity this year remains strong, albeit slowly now that the bounce effects are wearing off. Russia’s GDP growth in the second quarter of this year was 10.2% y/y – a high not seen since 1999 when the economy bounced back from the 1998 financial crisis that wrecked the economy and caused the top tier of Russia’s banking sector to collapse. The damage done by this crisis is far milder by comparison with bankruptcies being limited to small and medium-sized enterprises (SME), largely in the service sector. No major companies have gone bankrupt.
August PMI data signalled another decline in operating conditions across the Russian manufacturing sector, Markit said.
“Driving the overall contraction were faster downturns in production and new orders, as domestic and foreign client demand weakened. As a result, pressure on capacity eased with backlogs of work falling solidly and employment contracting at the fastest pace since November 2020. Nevertheless, output expectations strengthened amid hopes of a pick-up in customer demand over the coming months,” Markit said in its monthly report.
High inflation remains the main problem in the post-crisis economy which has
45 RUSSIA Country Report September 2021 www.intellinews.com