Russia’s manufacturing sector contracted at the fastest pace in three months in March, amid a strong decline in production and new orders 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 47.5 in March from 48.2 in February. Any reading below 50 indicates contraction in the sector.
Domestic and foreign demand conditions weakened in March as the outbreak of Covid-19 resulted in a halt in operations of businesses across the world.
The total new orders decline was the quickest for four months and extended the trend seen since June 2019. Mirroring the trend for total sales, new export orders decreased sharply in March.
The degree of confidence at manufacturers decreased to a series low, amid weaker demand conditions and global economic uncertainty. Firms still expect output to rise over the next twelve months, although the level of optimism was the lowest seen in the series’ eight-year history.
On the price front, rates of input cost and output charge inflation quickened in March as suppliers increased the price due to shortage of raw materials. Cost inflation was the highest in 12 months.
The pace of decline in employment softened and the number of workforce remained broadly unchanged at the end of the first quarter. Backlogs of works reduced with decrease in the strain on capacity.
A strong decline was seen in the holdings of both pre- and post-production inventories in March.
“The Russian manufacturing sector remained in contraction in March, as the impact of the outbreak of Covid-19 began to emerge in global supply chains and external demand conditions,” Sian Jones, economist at IHS Markit, said.
“Our current forecast for industrial production indicates a contraction in year-on-year terms in the first quarter of 2020, with the decline accelerating through to the latter stages of the year,” Jones added.