Russian Manufacturing Expansion Slowed in November

Russia’s manufacturing growth slowed as input prices climbed the most since April 2008 and employers ceased hiring, highlighting the risks facing the central bank as it tries to tame inflation without blunting the recovery.

The Purchasing Managers’ Index fell to 51.1 last month, the weakest since March, from 51.8 in October, HSBC Holdings Plc said in a report today, citing data compiled by Markit Economics. The survey-based index indicates a contraction when it is below 50 and growth with a figure above 50.

“We expect a further output growth moderation in manufacturing, combined with high inflationary pressures and elevated output prices growth,” Alexander Morozov, HSBC’s Moscow-based chief economist for Russia and the Commonwealth of Independent States, said in the statement.

The central bank is trying to keep a lid on prices while sustaining the recovery after the Russian economy slumped 7.9 percent last year. Annual inflation will exceed the official forecast of 8 percent this year while gross domestic product gains 3.8 percent, less than the 4 percent government forecast, Deputy Economy Minister Andrei Klepach said this week.

While Bank Rossii said it’s committed to maintaining “monetary stimulus” to support domestic demand, it retracted a pledge to keep its main interest rates at a record low “for the coming months” as it left the refinancing rate at 7.75 percent for a sixth month on Nov. 26.

Manufacturing input costs rose “sharply” in November as higher prices for oil products, metals and grain fanned inflation, HSBC said. Producers responded by lifting output prices the most since July 2008, it said.

The industry saw a “near-halt” in employment growth as output stagnated in November after “modest growth” during the previous month, HSBC said.

Russia’s unemployment rate in October rose to 6.8 percent, increasing for the first time in three months.

To contact the reporters on this story: Stephen Bierman in Moscow; Paul Abelsky in Moscow at

To contact the editor responsible for this story: Willy Morris at

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