Russia's manufacturing activity declined significantly in June, with the Purchasing Managers' Index dropping to 47.5 from 50.2 in May. Weak demand and a strong ruble led to reduced new orders, impacting exports and prompting job cuts. This contraction represents the worst conditions for manufacturers since March 2022. Business confidence has also plummeted amidst global economic uncertainty. Analysts express concerns about the sustainability of Russia's wartime economy, previously characterized by government spending likened to 'budgetary amphetamines'.
"The Russian manufacturing sector signalled a renewed deterioration in operating conditions during June," S&P Global wrote.
The downturn was driven by a contraction in new orders due to weak client demand and the strong ruble, which makes Russian exports more expensive.
Factories cut jobs at the fastest pace since April 2022 and slashed purchasing activity at a rate not seen since March 2022.
Many analysts have said its resilience isn't sustainable in the long run as it's fueled by wartime spending.
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