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Rays of recovery - Russian manufacturing to expand

Bloomberg reported that Russian manufacturing may have emerged from a year long slump this month as external demand recovered, companies rebuilt stocks and the government ramped up spending to contain the worst downturn in a decade.

According to the median estimate of 16 economists surveyed by Bloomberg, VTB Capital’s Purchasing Managers’ Index reached 50 in August for the first time since July 2008. The gauge was at 48.4 in July. VTB will release the data at 8 AM in Moscow tomorrow. A figure above 50 indicates growth.

Mr Yaroslav Lissovolik chief economist in Moscow at Deutsche Bank AG said “There is likely to be further upward momentum in manufacturing in August as the ruble’s weakening coupled with improving external conditions raise demand for exports and offer more scope for recovery in the real sector.”

The Economy Ministry said resurgent demand in parts of Europe and Asia, rising commodities prices and a pick up in construction have boosted companies such as OAO Novolipetsk Steel, the largest steelmaker by market value, and metals company OAO Metalloinvest. The economy expanded for a second month in July growing a seasonally adjusted 0.5%.

Mr Alexei Ulyukayev first deputy chairman of the central bank said “The real economy saw a change in trends in June and July. The lowest point of the downturn was probably passed in May. The so-called bottom is behind us.”

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