Russian Manufacturing Worsens More Than Forecast on Oil Collapseby
Industry gauge fell more than estimated in February to 49.3
Ruble volatility, cheap oil are unsettling business confidence
Russia’s manufacturing industry deteriorated more than forecast in February as new export orders declined while currency volatility and cheap oil darkened the economic outlook.
The Purchasing Manager’s Index fell for a third month, dropping to 49.3 from 49.8 in January, according to a statement released by Markit Economics on Tuesday. The median of three estimates in a Bloomberg survey was 49.5, below the threshold of 50 that separates contraction from growth.
“Russian manufacturing conditions remain in a fragile state,” Samuel Agass, an economist at Markit, said in the statement. “With both low oil prices and the instability of the ruble also acting as factors for concern, the upcoming months look set to be challenging for the sector.”
The downturn in manufacturing is a further hurdle for the economy of the world’s biggest energy exporter, which is on track for its longest recession in two decades after contracting 3.7 percent last year. Swings in oil have whipsawed the ruble after crude prices resumed their decline at the start of 2016.
The Micex Manufacturing Index was little changed at 1,467.12 at 11:36 a.m. in Moscow. The ruble, which is down more than 16 percent in the past 12 months against the dollar, strengthened 1.8 percent to 73.8550 against the U.S. currency. Three-month implied volatility, a measure of exchange-rate swings used to price options, is the second-highest globally after Argentina’s peso, suggesting investors anticipate ruble price fluctuations will persist, data compiled by Bloomberg show.
An index of business confidence compiled by a center at the Higher School of Economics in Moscow contracted in February for the first time since March 2015, with more than half of respondents blaming the “uncertain economic situation.”
The government has spent two months discussing a stimulus program to combat the crisis, struggling to find financing for more than a fifth of the proposed measures. The plan has now been sent to Prime Minister Dmitry Medvedev for signature, Deputy Economy Minister Oleg Fomichev said Tuesday.