The PMI index of the manufacturing industries of the Russian Federation in May 2022 amounted to 50.8 points, having risen from 48.2 points in April, according to the materials of the S&P Global study. The value of the indicator above 50 points indicates an increase in business activity, and below this level – its decline. As noted in the press release, May data signal a resumption of growth in the Russian manufacturing sector. Production fell again in May, but the rate of contraction slowed to the lowest since January. The decline in production came on the back of a continuing monthly fall in new orders, which reflected weak domestic and external customer demand. New export orders fell at one of the sharpest rates on record, largely due to the impact of sanctions. A number of companies said that new export sales were declining as previously signed contracts expired. The cost of raw materials increased markedly after the imposition of sanctions, the cost burden of firms increased in May. Currency fluctuations and sanctions supported the prices of imported resources. Cost inflation has eased (to the lowest since July 2020, when prices for some materials fell). While the cost burden continued to rise in the past month, companies have only responded with modest increases in selling prices. At the same time, purchases of materials returned to growth for the first time since January. Materials were purchased in anticipation of greater demand from customers in the future. However, inventories both before and after production were declining again. Meanwhile, the confidence of manufacturing companies grew in May. The degree of optimism was the highest in three months in light of the hopes for increased customer demand over the next 12 months. Nevertheless, the level of positive sentiment was below the trend of the series. Finally, firms were downsizing their workforce in May. The fall in employment has generally been steady. Companies reported sufficient capacity to process new orders, while drawing attention to the lack of qualified candidates to replace volunteers. Backorders were down only slightly. Source: FINMARKET.RU

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