Business activity in the Russian industry fell sharply in July

The purchasing managers ‘ index (PMI) for manufacturing sector dropped to 49.5 points in July, according to a press release from Markit. In June, he was at the level of 51.5, which was the best result in 19 months.

Russian producers indicated production growth for the third month in a row, however, as explained in Markit, the pace of growth was only marginal. The number of uncompleted orders rose for the first time since January 2013, however, employment in the manufacturing industry declined after two months of growth.

The decline in business activity occurred against a background of weak demand for Russian goods. The number of export and domestic orders fell. As pointed out by Markit, some companies were forced to refuse new orders because of a shortage of production capacity.

“Worsening demand conditions continued to exert pressure on economic performance of Russian producers in July. Head the index again slipped below the critical level of 50.0 points decline in total new orders. This reduction led to the weakening of output growth and decline of jobs across the sector,” said Markit economist at IHS Samuel Agassi.

Agassi also noticed that the increase in unfinished orders pointed to the increasing pressure on production capacity. The analyst added that lower inventory levels and purchasing activity suggests that companies are being careful.