Russia's Manufacturing Activity Moves Into Expansion Territory For First Time Since Ukraine Invasion

Zinger Key Points
  • Russia's manufacturing sector entered into expansion territory for the first time since January.
  • The improvements were due to slower declines in output, new orders, employment and stock of purchases.

Russia's invasion of Ukraine proved determinantal to the smaller nation, with the World Bank estimating a 45% contraction in Ukraine's GDP in 2022. The aggressor also had to pay a price, as evidenced by a slowdown in growth.

The latest economic data suggests that the Russian economy may be recovering from the impact of global sanctions and the costs associated with waging a war.

The manufacturing sector in Russia entered into expansion territory for the first time since January, according to the manufacturing purchasing managers' index (PMI) released by S&P Global.

The seasonally-adjusted manufacturing PMI increased from 48.2 in April to 50.8 in May, with the 50-level demarcating expansion and contraction. The improvement came about due to slower declines in output, new orders, employment and stock of purchases.

Related Link: Investment Strategist Says Global Economy Entering 'War-Cession'

Russia commenced military operations in Ukraine on February 24, and ever since the manufacturing PMI has been trending below 50.

Manufacturing output and new orders fell further, but at a slower pace, as sanctions dented client demand. New export orders continued to plunge and supplier delivery times lengthened substantially as trade and logistics routes were reduced.

On the other hand, inflation slowed, with input prices rising at the slowest pace since July 2020 and selling price inflation slowing to the lowest level in about two years.

Posted In: EurasiaRussiaUkraineGovernmentNewsPoliticsGlobalEconomicsGeneral

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