Weak demand drags on Russian factory activity in August -PMI

MOSCOW (Reuters) - Russian manufacturing activity declined for the third consecutive month in August as downturn in production and new orders deepened, a business survey showed on Wednesday.

IHS Markit's Purchasing Managers' Index (PMI) for the sector fell to 46.5 from July's 47.5, slipping further below the 50.0 mark that separates expansion from contraction.

"Russian manufacturers saw the health of the sector continue on a downward trajectory during August, as demand conditions weakened further. Total sales fell at a quicker pace amid worsening domestic and foreign customer demand," said Sian Jones, an economist at IHS Markit, which compiles the survey.

New orders decreased at the fastest pace since November, while total sales were dampened by weaker foreign customer demand, which showed its sharpest fall since May 2020.

Employment fell for a third consecutive month as some firms did not replace voluntary leavers.

"Cost cutting efforts were also reflected in a sharp drop in input buying," Jones said.

Average cost burdens rose once again in August albeit at the slowest pace for almost a year, as the surveyed companies cited higher supplier charges and raw materials shortages.

Russian goods producers remained optimistic about the coming year, however, betting on a recovery in demand in coming months.

(Reporting by Anna Rzhevkina; Editing by Andrey Ostroukh and Catherine Evans)

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