MOSCOW (Reuters) – Russia’s manufacturing sector experienced its sharpest contraction in nearly three years in March, as output and new orders fell in the face of weak domestic and foreign demand, a business survey showed on Tuesday.
The S&P Global Russia Manufacturing Purchasing Managers’ Index (PMI) dropped to 48.2 in March from 50.2 in February, sliding below the 50 level that separates expansion from contraction.
The downturn marked the first deterioration since September and the most significant since April 2022, a month when international sanctions imposed over Russia’s invasion of Ukraine two months earlier were having a serious impact.
Output levels fell in March at their sharpest level since July 2022.
New orders decreased for the first time since October, and at the fastest pace in nearly three years, as both domestic and export demand weakened.
Russia’s significant spending on military equipment and weapons to sustain its war in Ukraine has buoyed a manufacturing sector that otherwise may have suffered more as some countries shunned Moscow.
“Logistics challenges and delays to rail transportation reportedly led to longer lead times for inputs,” S&P Global said.
“The extent to which supplier quality worsened was the least marked since last May, however.”
Despite the challenging conditions, Russian manufacturers expressed optimism about future output, driven by plans for investment in advertising, new products and employees.
(Reporting by Reuters; Editing by Hugh Lawson)
