Russian manufacturing optimism falters in December
A barometer of Russian manufacturing industry – the HSBC Purchasing Manager Index (PMI) – stood at 51.6 points in December, down from 52.6 a month ago. The December reading was also below its historic average of 52.1, while the average figure for the entire year remained at the 2010 level of 51.8 points
Demand from abroad – one of the main traditional drivers of Russia’s manufacturing – weakened in December, as new orders received from export markets decreased for the first time since September.
Output was also growing at a slower pace in December, said Alexander Morozov, Chief Economist (Russia and CIS) at HSBC. It “was around half as strong as the pace before the 2008 crisis,” he added.
Strong performance in previous periods, with a surprising spike in economic activity in November and a December 2010 PMI reading of 53.5 – the highest since March 2008 – also made December figures look poor, explained Morozov.
“The PMI report gives rise to concern that year-on-year manufacturing and industrial growth may have slowed down significantly in December due to the strong negative base effect.”
Slower growth of export orders, with output outpacing new orders, all make a scenario of further slowdown of Russia’s manufacturing increasingly possible, Morozov warned.
However, “a repetition of the 2008 crisis scenario looks unlikely from the current levels and trends of PMI indicators,” said HSBC Chief Economist.
A PMI reading above 50 points to growth, with below 50 pointing to economic contraction