- Industry gauge fell to 48.3, weakest reading in seven months
- Factories are in `midst of worsening downturn', Markit says
Russia’s manufacturing industry deteriorated more than forecast in March, falling to the weakest in seven months as both output and new orders contracted amid weak demand.
The Purchasing Managers’ Index slipped for a fourth consecutive month, dropping to 48.3 from 49.3 in February, according to a statement released by Markit Economics on Friday. The median of six estimates in a Bloomberg survey was 49.5, below the threshold of 50 that separates contraction from growth.
“Russian factories are currently in the midst of a worsening downturn,” Samuel Agass, an economist at Markit, said in the statement. “If the current sluggish market environment continues over the next few months, firms will be looking to the Bank of Russia to provide some stimulus in order to revive the underperforming economy.”
The economy of the world’s biggest energy exporter is on track for its longest recession in two decades after contracting 3.7 percent last year. The collapse in oil prices triggered a devaluation of the ruble, spurring inflation and undermining demand. While consumer-price growth has slowed, the central bank kept its benchmark interest rate at 11 percent for a fifth meeting last month, taking note of what it called a “less severe downturn” than previously estimated.
The Micex Manufacturing Index of 11 stocks has gained 0.7 percent this year, underperforming the broader Micex Index, which is up 5.6 percent. The ruble, which is down more than 14 percent in the past 12 months against the dollar, was 0.3 percent weaker at 67.1950 versus the U.S. currency at 10:54 a.m. in Moscow.
The Bank of Russia worsened its estimate of a first-quarter contraction to 1.7 percent to 2.5 percent from a year earlier and forecasts the recession will ease to 0.3 percent to 1.8 percent in the second quarter.