Russian Manufacturing Sector Expands At A Slower Rate in December

Posted on December 29, 2011


The Russian economy continues to hum along according to the HSBC PMI survey. The PMI Manufacturing Index registered 51.6 in December, 1.0 percentage points lower than November. New orders grew more slowly in December as export demand declined for the first time since September.

Manufacturing output expanded as firms hired more workers in December. The expansion in output caused order backlogs to decline. Both input and output prices rose during the month.

Alexander Morozov, Chief Economist (Russia and CIS) at HSBC, said:

“Growth momentum in manufacturing eased in December, following the surprising spike in economic activity in the previous month, the HSBC Russia Manufacturing PMI revealed. Output growth in December was around half as strong as its trend pace before the 2008 crisis. In other words, manufacturing keeps growing, but slowly. The PMI report gives rise to the concern that year-on-year manufacturing and industrial growth may have slowed down significantly in December due to the strong negative base effect.

“Forward-looking PMI components point to a higher probability of a further slowdown of economic growth in manufacturing in the coming months. First, output growth is faster than growth of new orders, which suggests that output growth should moderate at some point. Secondly, new export orders stopped growing again in December, which usually translates into a moderation of overall growth momentum. The good news is that a repetition of the 2008 crisis scenario looks unlikely from the current levels and trends of PMI indicators. Another piece of good news is that inflationary pressures remain subdued, despite some acceleration of output prices growth in December. By and large, we consider the Manufacturing PMI report conducive to some monetary policy easing.”

PMI Index Aug Sep Oct Nov Dec
Manufacturing 49.9 50.0 50.4 52.6 51.6
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