Manufacturing grew for the first time in 14 months in September as new business and output expanded, the latest sign of an economic revival, VTB Capital said Thursday in its Purchasing Managers’ Index.
The index advanced to 52 from 49.6 the previous month, the bank said. A reading above 50 signals growth. The bank surveyed 300 purchasing executives.
There was “an overall improvement in operating conditions in the Russian manufacturing sector for the first time in over a year,” according to the report. “Output and new orders built upon the growth seen one month earlier,” and the rate of job cutting “eased sharply.”
The economy shrank a record 10.9 percent in the second quarter as demand for Russian oil, gas and metals fell and prices tumbled during the global downturn. Output stopped contracting in June, giving reason for “cautious optimism,” Prime Minister Vladimir Putin said earlier this week.
“Economic growth is returning,” Renaissance Capital wrote in a quarterly strategy report Thursday. “The green shoots in the Russian economy are becoming increasingly abundant.”
The PMI Index has risen every month since reaching a record low of 33.8 in December 2008.
“Driving the overall expansion of the sector in September was a further increase in new orders,” the report said.
A swift return to the pace of growth seen before the crisis, when the economy expanded at about 7 percent annually, is unlikely, though, and a full recovery may take three to four years, Finance Minister Alexei Kudrin said this week.
Gross domestic product stagnated in August compared with July, after two consecutive months of seasonally adjusted growth. The slump in industrial production deepened in August to a 12.6 percent annual decline, while retail sales fell an annual 9.8 percent, the seventh month of declines and the biggest fall since August 1999.
The Central Bank lowered its main interest rates on Sept. 29 for the seventh time since April in a bid to spur lending. The banking industry is “structurally weak” and faces increasing risks, Standard & Poor’s said this week.
Delinquent loans to companies advanced to 5.7 percent of total lending from 5.3 percent in the previous month, while the ratio for consumer loans climbed to 6.2 percent from 6 percent, according to data compiled from Central Bank figures posted on its web site on Sept. 29.
“There are few quality borrowers, and banks may cease lending to most companies until market conditions improve,” Andrei Sharonov, managing director of Troika Dialog, said in an interview last month. “Companies are losing cash flow and becoming unable to service debt.”
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