Russian manufacturing contracts slightly as job cuts hit fastest since May, PMI shows

Russia's manufacturing sector experienced a slight contraction in September as weak demand led to further declines in output and new orders, according to a business survey released on Thursday. The seasonally adjusted S&P Global Russia Manufacturing Purchasing Managers' Index (PMI) increased to 49.8 from 48.8 in August, indicating growth but still below the critical 50-mark threshold that signifies expansion.

Output decreased for the second consecutive month, although the rate of contraction slowed compared to August, as companies attributed the reduced production to weak demand and lower new order inflows. New orders also declined for a second month in a row, primarily due to higher prices and increased competition. Export orders dropped for an 11th consecutive month, marking the sharpest decline since May 2022.

Employment fell for a 10th consecutive month, with the pace of job cuts being the fastest since May. Many firms linked the reduction in headcounts to the non-replacement of voluntary leavers. Cost pressures remained significant but eased to a three-month low, while output price inflation slowed to the weakest level since June. Supplier delivery times lengthened to the greatest extent since October 2024 due to transportation delays and logistics challenges.

Despite these setbacks, manufacturers expressed a more optimistic outlook for the year ahead. Confidence in the sector's prospects rose to a three-month high, buoyed by hopes of stronger demand and the arrival of new customers. However, this optimism remained below the series average.