Russian manufacturing production up in May, but exports keep falling

ANKARA

Russia’s manufacturing activity posted growth in May for the first time since January, according to a global data company on Wednesday, amid heavy sanctions imposed by the Western countries.

The S&P Global Purchasing Managers' Index (PMI) rose to 50.8 from 48.2 in April, backed by slower declines in output, new orders, employment and stocks of purchases.

S&P Global said the drop in new orders shows weak domestic and foreign client demand, as new export orders diminished at one of the fastest paces on record, mainly due to the effect of sanctions.

Input prices increased remarkably with firms continuing to record substantial increases in cost burdens in May, it said. Currency fluctuations and sanctions reportedly pushed up imported input prices.

"Although output charges increased further, firms responded to softer upticks in cost burdens with only a marginal rise in selling prices. The pace of charge inflation was the slowest since June 2020," S&P said.

Meanwhile, business confidence across the Russian manufacturing sector also went up in May.

"The degree of optimism was the strongest for three months amid hopes of greater client demand in the coming 12 months," the global body said.

The country also saw a slower decline in employment as firms noted sufficient capacity to process incoming new work, but also a lack of skilled applicants to replace voluntary leavers.

Russia's currency, the ruble, surprised the world after it bounced back from the West's initial sanctions that sunk it to lows of 150 to the US dollar in early March. By mid-May, it rose to about 61.25 – its highest in 28 months.

Some experts think that this recovery is a sign of economic resilience, but others have warned that things are not bright as they appear.

The Russian central bank itself has projections for 2022 that the economy would experience a recession of 8% to 10%.