Fastest growth in Russian factory activity since 2014

© Ilya Naymushin
Russia's manufacturing sector has seen its most rapid expansion in 19 months, as output and new orders rose in June, according to the monthly Markit survey published on Friday.

A recovery in demand pushed the country's Purchasing Managers' Index (PMI) to 51.5 in June from 49.6 the previous month. PMI above the 50 level separates growth from contraction. Last month's figure is the highest level since November 2014.

“Russian manufacturers enjoyed one of their most prosperous months for almost two years, with expansion recorded in production, new order intakes and workforce numbers,” said Samuel Agass, economist at Markit.

However, the agency registered fewer new export orders during the past 34 months with the smallest contraction in the latest period.

“The rise stemmed from the domestic market only, as new export orders contracted further,” Mr. Agass said, stressing that interest for Russian-made products increased mostly due to domestic demand.

Pressure on prices has risen along with demand and expanded production, due to increasing input and output costs as manufacturers are tied to higher raw materials costs.

“With backlogs also edging closer to stabilization, Russia's manufacturing sector could be set to shift into a higher level of growth over the second half of 2016,” the analyst said.

The report reveals the Russian economy, hit by low oil prices, has bottomed out though a little later than originally expected.