Russian manufacturing at weakest since 2009

The Purchasing Managers’ Index fell to 47.6 last month, the lowest since June 2009, from 48.9 in December, HSBC Holdings Plc said Monday in a statement, citing data compiled by Markit Economics. Readings below 50 indicate a deterioration in conditions. The ruble fell 1.5 percent against the dollar as of 1:51 p.m. in Moscow after a surprise interest-rate cut Friday.

"Signs of contracting business activity became more visible,” said Alexander Morozov, HSBC’s chief economist for Russia and the Commonwealth of Independent States. "Meanwhile, price pressures intensified further, increasing the probability of a ‘bad equilibrium:’ high price growth amid falling demand.”

The economy of the world’s largest energy exporter faces its steepest downturn in six years with oil prices near 2009 lows compounding damage from sanctions over Ukraine. The central bank raised borrowing costs six times last year and spent about a fifth of its reserves to prop up the ruble and tame inflation. Friday’s unexpected reduction in the benchmark came as some officials criticized monetary policy for stifling business.

Higher interest rates in the agriculture industry are making it harder for farmers to expand output as winter weather threatens crops, according to Amy Reynolds, a senior economist at the International Grains Council in London.

 

(Bloomberg)