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Manufacturing PMI improved in September


Russian Manufacturing PMI for September advanced to 52.4 (from 51.0 in August). The output sub-index ticked up to 53.9 (from 53.6), while the new orders subindex increased to 54.0 (from 50.6).

Meanwhile, the export orders sub-index increased to 50.4 in September (from 48.3 in August), but remained near the 50 mark. The employment component improved to 51.8 (from 50.2), the strongest level since May 2012. The inflation sub-indices progressed strongly in September: costs growth accelerated to 61.4 (from 58.8), reaching a 17-month maximum, and supported the growth in output prices, which increased to 54.8 (from 51.4 a month ago). 

The Manufacturing PMI reflects a modest rebound in the sector growth (as compared with the summer months). Most of the sub-indices point to faster growth, but we consider September’s acceleration to be fragile and unsustainable in the coming quarters.

The advance in employment growth in Russia’s manufacturing sector is consistent with the Rosstat data, which indicates unemployment at record lows and, therefore highlights near-term inflation risks.

At the same time, companies remain under pressure from rising input costs, although still robust demand has allowed them to transfer part of that cost increase onto the final consumer. 

Maxim Oreshkin, Daria Isakova
VTB Capital analyst

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