• Markit index rose to 49.6, the highest since January
  • Reading suggests conditions are moving closer to stabilization

Russian manufacturing contracted less than economists estimated last month, supplying further evidence to policy makers lauding a stabilization of the recession-ravaged economy.

The Purchasing Manager’s Index rose to 49.6 in May from 48 in April, according to a statement released by Markit Economics on Wednesday. The median of six estimates in a Bloomberg survey was 48.5, below the threshold of 50 that separates contraction from growth. The improvement in the overall index was driven by growth in production and job creation “evident for the first time in 35 months,” Markit said.

“Although falling demand for Russian goods remains a worry for policy makers, output returning to expansion territory and workforce numbers increasing, albeit in each case only marginally, highlights that the worst may have passed,” Samuel Agass, an economist at Markit, said in the statement. “With input buying rising at the fastest pace for 18 months, companies look set to boost production in the coming months if new orders pick up.”

The economy of the world’s biggest energy exporter is adapting to low oil prices. Gross domestic product declined 1.2 percent in the first quarter from a year earlier, the smallest drop since the contraction began at the start of 2015. In the absence of external shocks, growth may return in the “coming months,” according to estimates by the central bank’s research and forecasting department.

The Micex Manufacturing Index of 11 stocks has declined 1.60 percent this year, underperforming the broader Micex Index, which is up 8.06 percent. The ruble, which is down almost 20 percent in the past 12 months against the dollar, was 0.2 percent stronger at 66.5575 versus the U.S. currency at 10:35 a.m. in Moscow.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE