(Reuters) – Activity across Russia’s manufacturing sector rose slightly in November, a business survey showed on Monday, thanks to a fresh increase in output and new orders as a backlog of work cleared and firms cut the number of workers.
The S&P Global Purchasing Managers’ Index (PMI) for Russian manufacturing rose to 51.3 from 50.6 in October, edging above the 50 mark that separates expansion from contraction.
The uptick was attributed in part to a renewed rise in new sales, which ended a two-month decline, as demand conditions improved, although the pace of growth was slower than the series average.
Russia’s significant spending on military equipment and weapons since it invaded Ukraine in February 2022 has boosted a manufacturing sector that may have suffered as other countries shunned Moscow.
Gradually, Russian manufacturers found new markets overseas. New export orders rose for the fourth month in a row, although at a slower pace than in October.
Manufacturers have again registered job losses, the survey showed, and labor shortages are creating challenges in replacing those who leave voluntarily.
Unemployment in Russia fell to 2.3% last week, with labor shortages hitting all areas of the economy.
Russian firms are also eyeing the rouble, which has weakened to its weakest level since March 2022 last week, prompting the central bank to intervene in FX sales.
“Supplier price increases and unfavorable exchange rate fluctuations increased costs, according to the panelists,” S&P Global said.
Supply chain problems continued.
“Supplier delivery delays continued in November, as rail and shipping routes were identified by firms as key factors contributing to longer lead times for inputs,” S&P Global said.
Driven by optimism about new product development and investment in modernization, business confidence rose to its highest level since June, the survey showed.
