New orders buffer Russian manufacturing business with PMI escalating

HSBC Manufacturing PMI edged up from 50.0 to 50.4 in October, signaling a mild improvement in the manufacturing business climate at the start of Q4.

The seasonally adjusted HSBC Russia Manufacturing PMI tracks five major components – new orders, output, employment, suppliers’ delivery times and stocks of purchases.Manufacturing production in Russia rose for the twenty-seventh month running in October, supported by a resumption in new order growth and growth of output due to clearance of existing workloads. However, the rate of expansion in output was weak, partly reflected by external weakness such as insignificant growth of new orders from export markets, and lackluster domestic demand.The rate of growth in new business received by Russian manufacturers was muted, and well below the survey’s long-run trend.  Cost pressures faced by Russian manufacturers strengthened in October. The rate of input price inflation accelerated to its fastest since July, partly linked by panelists to the effect of rouble weakness on import prices, reflecting relatively muted demand for manufacturing inputs in recent months.Meanwhile, prices charged for Russian manufactured goods rose at the slowest rate in 27 months during October, reflecting the recent flat trend in demand.Alexander Morozov, Chief Economist (Russia and CIS) at HSBC, said Russian manufacturers felt some relief of their concerns in October “with moderate growth underpinned by new export orders and increase in new work since June.”Yet the morose global economic environment prevented high growth momentum, with manufacturing employment down for a third month running, Morozov added. Despite the upward trend in the manufacturing sector, the economist  warned however, “the unpromising data for employment in the sectors and growth of raw material prices may herald stagnation or anemic growth for the 4Q 2011”.