According to a business survey released on Wednesday, activity in Russia’s manufacturing sector grew in February at its quickest rate in six years, spurred by increases in production and new sales, but higher input costs increased inflationary pressures.
From 52.6 in January to 53.6 in February, the S&P Global Purchasing Managers’ Index (PMI) increased, going higher over the 50-point threshold that distinguishes expansion from contraction.
The industry has now grown for 10 consecutive months, a turnaround driven by domestic demand as new export orders have fallen for 13 straight months while Moscow has been carrying out what it refers to as a “special military operation” in Ukraine.
Massive corporate departure from Russia and sweeping Western sanctions have resulted in material shortages and delays in logistics over the past year, although businesses have shown some resiliency.
According to a survey of manufacturing companies, February’s significant increase in production was attributed to import substitution and an increase in new orders, S&P Global stated in a statement.
The poll revealed that input costs continued to rise as the pace of inflation accelerated.
According to S&P Global, the rate of increase in input prices was swift and the fastest since May 2022. Prices reportedly increased as a result of increases in supplier fees and unfavorable exchange rate changes.
Russia’s inflation is in danger of picking up speed once more, which would restrict the central bank’s ability to decrease interest rates and promote economic growth. According to figures released this week, Russian residents’ estimates for inflation increased to 12.2% in February.
Russian manufacturing enterprises were upbeat about the coming year due to increased customer demand and a growing clientele, but their level of confidence dropped to a four-month low.
According to S&P Global, “concurrently, the rate of job creation fell further.”