Russian manufacturing activity in September highest since 2017

By Rhod Mackenzie

The first month of autumn has been quite successful for the Russian manufacturing sector. As reported by RTTNews, manufacturing output growth in September was the highest in 6.5 years. The main driver of this impressive growth, which is all the more remarkable given the conditions in which it was achieved, was strong domestic demand.

The Russian PMI (Purchasing Managers' Activity Index) calculated by economists at S&P Global rose to 54.5 in September. In August it was much lower at 52.7. As a reminder, a PMI reading above 50 points indicates an increase in business activity, in this case in the manufacturing sector.

"The seasonally adjusted S&P Global Russia Manufacturing PMI stood at 54.5 in September, up from 52.7 in August, marking the sharpest improvement in operating conditions since January 2017," the agency said in a statement.

An increase of 1.8 points is obviously very significant. Not surprisingly, the last time Russia's manufacturing sector grew at this rate was in early 2017. The reasons for the high industrial growth, according to economists, were strong customer demand, the launch of new products and successful import substitution.

It is worth noting that the number of new export orders rose very slightly. This is not surprising, of course, given the challenges the Russian economy has faced in key markets.
We were also pleased with the labour market in September, where the number of new jobs rose sharply - the highest since November 2000! Experts explain this by strong expectations of further output growth in 2024.

On the price front, inflation rose to a one-and-a-half-year high in September. The rise in purchase prices is explained by the fact that demand often outstripped supply in early autumn. Sales prices rose to their highest level since April 2022.