Russian manufacturing contraction slows in February

The manufacturing sector in Russia continued its downward trend in February, though data suggests the pace of contraction is beginning to level off. According to the latest report from S&P Global Inc., the Purchasing Managers Index (PMI) edged up to 49.5 from 49.4 in January. While any reading below the 50.0 threshold indicates a decline, this latest figure represents the softest downturn recorded in a nine-month sequence of contraction. A primary driver behind the relative stabilization was a steadying of new orders, which ended an eight-month period of decline. Although domestic client interest showed signs of improvement, the international landscape remained difficult. New export orders fell at a more rapid pace than in the previous month, contributing to a 12-month streak of falling production levels, even if the latest reduction was considered fractional. The labor market within the sector faced renewed pressure as job shedding accelerated to its fastest rate since mid-2025. This marked the third consecutive month of decreasing employment. Simultaneously, manufacturers continued to grapple with supply chain hurdles, as delivery times for inputs lengthened for the fourth month in a row. Firms reported ongoing challenges regarding logistics and the sourcing of reliable suppliers. Price pressures showed signs of easing following a spike in January linked to value-added tax changes. However, both input and output price inflation remained at some of the highest levels seen in the past year, driven largely by the rising costs of fuel and raw materials. While business confidence dropped to one of its lowest points in over three and a half years, many firms maintained a degree of optimism rooted in planned investments for new facilities and technology.