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. Last Updated: 07/27/2016

July PMI Strongest of the Year

The manufacturing economy saw its strongest rate of growth this year in July on the back of increasing new orders driven by robust domestic and overseas demand, Moscow Narodny Bank said Thursday.

But the bank's survey also showed that increasing transport costs and energy prices have contributed to a sharp rise in the manufacturing input price index, signaling that the government may fail to curb 2002 inflation as much as it wants to.

The July Manufacturing Purchasing Managers' Index (PMI), featuring research data from a survey of 300 Russian purchasing managers, stood at 53.5, a rise on June's 52.6, the bank said in a statement.

A reading above 50 means expansion. July was the 44th straight month to show output levels rising.

"The rise in this month's PMI continues to reflect the robust levels of activity within Russia's manufacturing sector, primarily influenced by further increase in new orders and stronger overseas demand," it said.

The increase in the PMI in July was mainly driven by the continual strength of demand for Russian manufacturing goods, with a buoyant domestic market reported as the main driving force.

Overseas demand for Russian goods in July also rose at the fastest in 2002, the statement said. In response to increasing demand levels Russian manufacturers boosted their production in July at a rate unmatched since October 2001.

But the bank noted the rate of input price inflation in July was the strongest since February 2001.

"The impact of higher administered prices has contributed to a sharp increase in the MNB prices index, suggesting that inflationary pressures are likely to remain prominent over the coming months," it said.

Inflation, one of Russia's key economic problems, stood at 9 percent in the first half of the year against 18.6 percent in all of 2001.

PMI, the seasonally adjusted composite indicator, is designed to provide a single-figure snapshot of manufacturing conditions.