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Financial News: Russia Manufacturing Sector Deteriorates At Record Pace

Russia Manufacturing Sector Deteriorates At Record Pace

04/30/2020 - 04:10:00 (RTTNews)

(RTTNews) - Russia's manufacturing sector contracted at the fastest pace on record in April, amid decline in production and output expectations mainly due to the coronavirus, or Covid-19, outbreak, survey data from IHS Markit showed on Wednesday.

The Manufacturing Purchasing Managers' Index, or PMI, fell to 31.3 in April from 47.5 in March. Any reading below 50 indicates contraction in the sector.

This was the greatest deterioration since the survey began in September 1997.

New orders decreased at the fastest pace in the beginning of the second quarter and total sales declined largely by challenging domestic and foreign demand conditions due to coronavirus outbreak across Europe.

New export orders deteriorated at a record pace in April as clients cancelled or postponed orders.

The imported input prices were higher in April as the ruble depreciated. Cost burden increased sharply due to unfavorable exchange rates, with the pace of inflation increasing to the fastest since the hike in VAT in early-2019.

The degree of optimism towards the outlook over the next 12 months decreased in April. Firms were least confident since the series began in April 2012.

The firms cut their workforce at the quickest rate since January 2009 and the employment decreased sharply in April. The backlogs of work declined at the strongest pace since December 2008.

"Already-difficult demand conditions across the Russia manufacturing sector were further exacerbated by factory closures and lockdowns following the escalation of the outbreak of COVID-19," Sian Jones, Economist at IHS Markit, said.

"We expect industrial production in Russia to decline 3.8 percent in 2020, as the impact of the COVID-19 outbreak takes hold."

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