Russia's Manufacturing Sector Shows Signs of Stabilization with 1.1 PMI Gain

In April, the manufacturing sector in Russia showed signs of slight improvement, according to the Purchasing Managers' Index (PMI). The PMI for Russia's manufacturing sector rose from 48.2 in March to 49.3 in April, indicating a slowing decline in the sector's performance. Although the index remained below 50 for the second consecutive month, signaling that the economy is still in a state of contraction, the slight increase suggests a potential stabilization and recovery in the near future.

The report highlighted that the contraction in output and new orders has eased to a mild level. This improvement is attributed to the stabilization of supplier delivery times, which allowed manufacturers to slightly increase their procurement activities. The aim was to rebuild safety stocks and manage inventory more effectively, which could support production levels and economic stability.

Despite the slight improvement, the manufacturing sector continues to face significant challenges. The report emphasized that employment numbers decreased again, ending a three-month streak of net job gains. This decrease is due to reduced production demand, leading enterprises to refrain from replacing employees who left voluntarily. Additionally, weak customer demand continued to pressure both domestic and international new orders, with intense competition and reduced purchasing power further exacerbating the situation.

However, manufacturers' confidence remains high due to expectations of increased demand and plans to expand product ranges. The favorable trend in the dollar exchange rate has also contributed to a slower increase in input costs, which has helped to mitigate the rise in prices of imported goods. This has resulted in a more moderate increase in selling prices, marking the slowest rate of output price inflation since January 2023.

In summary, while the Russian manufacturing sector is still facing challenges, the slight improvement in the PMI and the stabilization of supplier delivery times suggest a potential recovery in the near future. However, the persistent weakness in customer demand and intense competition highlight the ongoing difficulties faced by the industry. The high confidence among manufacturers and the favorable trend in the dollar exchange rate provide some optimism for the sector's future performance.