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HSBC Russia: Country’s Purchasing Managers’ Index

  • Input prices rise at fastest rate since October 1998
  • Fastest rise in output prices since data first collected in January 2003
  • Headline PMI* falls below 50.0 as new orders decline and output stalls

The Russian manufacturing sector continued to endure surging inflationary pressures due to the collapsing ruble at the end of 2014, according to HSBC PMI® data compiled by Markit. Input prices rose at the fastest rate in over 16 years, and prices charged for manufactured goods increased at a record pace. Moreover, output was unchanged on one month previously as new orders fell for the first time since June.

The survey’s headline figure is the HSBC Purchasing Managers’ Index™ (PMI) – a composite indicator designed to give a single-figure snapshot of operating conditions in the manufacturing economy. It is derived from indicators for new orders, output, employment, suppliers’ delivery times and stocks of purchases. Readings above 50.0 indicate an overall improvement in business conditions, below 50.0 an overall deterioration.

The PMI fell back below the no-change threshold in December, registering 48.9, down from 51.7 in November. That marked the first overall deterioration in business conditions in six months, and the month-on-month drop in the headline figure in the latest period was the largest since April 2011.

December data showed a fall in new orders, following a five-month period of growth. Though only marginal, the contraction represented a marked turnaround since November which had posted the fastest expansion since October 2013. New export orders continued to weigh on overall new business inflows, declining for a survey record sixteenth successive month – albeit at the slowest pace since January.

The fall in new orders resulted in a halt to production growth in December, following six months of increases. Reduced pressure on capacity was also evident as backlogs declined at the strongest rate since July. Input price inflation accelerated for the fifth month running in December, hitting the highest since October 1998. It was also the second-strongest rate of inflation in the survey history. Firms widely linked upward pressure on costs to the weakening exchange rate and resulting higher import prices. Subsequently, manufacturing output prices rose at the fastest rate since charges data were first available in January 2003.

The volume of inputs purchased was broadly unchanged compared with one month previously, resulting in the sharpest decline in stocks of inputs since April. Employment continued to decline in December, extending the current sequence of job shedding to a year-and-a-half. Moreover, the rate of decline in the latest period was the sharpest since May.

* The Purchasing Managers’ Index™ (PMI® ) is a composite index based on five of the individual indexes with the following weights: New Orders – 0.3, Output – 0.25, Employment – 0.2, Suppliers’ Delivery Times – 0.15, Stock of Items Purchased – 0.1, with the Delivery Times index inverted so that it moves in a comparable direction.