Manufacturing Sector Continues Contraction
The Russian Federation's manufacturing sector experienced a continued deterioration in November, marking the sixth consecutive month of contraction. While the S&P Global Russia Manufacturing Purchasing Managers' Index (PMI) saw a slight increase to 48.3 from October's 48.0, any figure below 50.0 indicates a decline in operating conditions. This latest data, released on Monday, December 1, 2025, highlights persistent challenges within the industry.
Output Plummets to April 2022 Levels
Despite the marginal uptick in the headline PMI, the underlying data revealed a significant downturn in production. Output levels within the manufacturing sector fell at their sharpest rate since April 2022. Manufacturers largely attributed this steep decline to a combination of lower new orders and ongoing supply chain delays.
The period of April 2022 was notably marked by significant economic disruption following the onset of the conflict in Ukraine and the imposition of international sanctions, making the current output decline particularly concerning.
Challenges in Demand and Supply Chains
New orders continued their downward trend for the sixth consecutive month in November. Although the pace of this contraction eased slightly compared to October, it underscores a persistent weakness in demand. Furthermore, new export sales also contracted, reflecting 'muted client demand in existing markets.'
Supply chain issues intensified during the month, with delivery times lengthening to the greatest extent in nine months. Reports indicated that raw material shortages and logistics delays were key factors, leading to the largest decline in vendor performance since February.
Employment and Inflationary Pressures
In a notable development, employment within the manufacturing sector returned to growth in November, with the rate of job creation being the fastest since July 2024. This marginal increase was primarily due to firms filling existing vacancies.
However, inflationary pressures mounted, as input costs rose at their fastest pace since May, driven by higher utility and raw material prices. In response, Russian goods producers increased their output charges at the quickest rate since March, aiming to pass on these elevated costs to customers.
Business Confidence Remains Subdued
While business confidence saw a slight improvement from its recent low in October, supported by planned investments in new products and technology and hopes for stronger demand, overall optimism remained the second-lowest in over three years. This indicates a cautious outlook among manufacturers regarding future operating conditions.
5 Comments
Leonardo
Just a natural market correction. Nothing to see here.
Raphael
While the decline is significant and concerning for Russia, the slight uptick in the PMI suggests some stabilization might be on the horizon. However, the deep fall in output indicates severe underlying issues persist.
Leonardo
This is the economic pressure needed. Keep it up.
Donatello
It's clear that sanctions are having an effect on Russia's manufacturing, particularly with supply chain issues and new orders. But the return to employment growth could indicate a shift in internal focus or new strategies to mitigate job losses.
Leonardo
While the data points to a struggling manufacturing sector, particularly with falling new orders and rising input costs, the mention of planned investments in new products and technology shows some long-term strategic thinking, despite low confidence.