Russia’s manufacturing PMI contracted for a ninth consecutive month in February, although the pace of decline softened further, according to S&P Global, as new orders showed signs of stabilising and inflationary pressures moderated after January’s VAT-driven spike. (chart)

The seasonally adjusted S&P Global Russia Manufacturing Purchasing Managers’ Index rose fractionally to 49.5 in February from 49.4 in January, remaining just below the 50 no-change threshold that separates growth from contraction. S&P Global said the reading signalled “only a slight decline in the health of the sector” and marked the softest downturn in the current sequence of deterioration.

The marginal improvement was supported by what S&P described as a “broad stabilisation in new order inflows” following eight months of contraction. While firms continued to report subdued demand conditions, “some firms highlighted greater client interest”. Export demand remained weaker, however, with new export orders declining at a quicker pace.

Output fell for a twelfth successive month, but the rate of contraction was “only fractional” and the slowest in the current downturn. S&P said the impact of January’s increase in VAT had begun to dissipate, with rates of input cost and output price inflation cooling notably from the previous month’s highs and falling below their respective long-run averages. Even so, both remained among the fastest seen over the past year as higher fuel and raw material costs were passed through to customers.

Labour market conditions deteriorated further. February marked a third consecutive monthly decline in employment, with the pace of job shedding accelerating to its sharpest since June 2025 as companies opted not to replace voluntary leavers. Backlogs of work fell for a thirteenth month, indicating continued spare capacity across the sector.

Business confidence also weakened. S&P said “challenging business conditions reportedly weighed on confidence in the outlook for output”, with optimism slipping to one of the lowest levels in more than three and a half years. Nonetheless, positive sentiment was underpinned by investment in new facilities and technology and hopes of stronger demand ahead.

Input purchasing declined at the fastest pace in four months as firms drew down inventories to meet orders, while vendor performance deteriorated further amid logistics delays and difficulties sourcing new suppliers, leading to a fourth consecutive monthly lengthening of delivery times.