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. Last Updated: 07/27/2016

Manufacturing Industry Clinging to Growth

The manufacturing industry clung to growth in January, a Moscow Narodny Bank report showed Tuesday, two months after the sector shrank for the first time since 1998.

But the rate of growth slipped, with the bank's Purchasing Managers Index falling to 50.9 -- still holding above the 50.0 threshold separating growth from contraction -- from 51.1 in December. In November the PMI was 49.8.

"The easing in this January's headline index remains consistent with the past five years of survey data, and is not seen as a further deterioration in the level of activity across Russia's manufacturing base, and is likely to have been influenced by the extended holiday period," said MNB economist Paul Timmons.

The index for output slipped to 51.8 after rising to 52.2 in December. New orders also registered a downturn to 52.3 from 52.6.

"While the emphasis on the lack of access to working capital was somewhat lower than previous months, those that incurred such difficulties cited higher input inflation as the constraining factor," Timmons added.

Official data put factory gate inflation year on year for 2004 at 28.3 percent. Firms faced rises in costs for metals, electricity and transport, the survey showed.

"In response, most companies continue to raise output prices, which in turn serves to highlight the underlying inflationary pressures prevalent in the Russian economy," Timmons said.

The head of Russia's statistics office has already said consumer price growth in January could be up to 2.5 percent month-on-month, faster than the 1.8 percent seen in January 2004.

Industrial output growth in 2004 slowed to 6.1 percent from 7.0 percent the year before.