Russian manufacturing slipped to a 5 1/2-year low as the nation’s worst currency crisis since 1998 stokes inflation and weighs on businesses already facing a recession.
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, Bloomberg reported.
“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. A surprise interest-rate cut Friday came as some officials criticized monetary policy for stifling business.
The ruble rebounded after depreciating for three days and traded 0.5 percent stronger at 68.6 against the dollar as of 2:48 p.m. in Moscow. The yield on five-year government ruble bonds fell for a second day, declining 11 basis points to 14.76 percent, the lowest in a week, as the rate cut made the return on local bonds more appealing to investors.
