Russia’s manufacturing PMI index stumbled in February, after a good start to the year, highlighting the fragile nature of the country’s economic recovery. The index barely budged, posting a 50.2 score, only just above the 50 no-change mark, its smallest increase in more than a year and half, IHS Markit said in a press release. That result is way down on the 52 and 52.1 manufacturers scored in December and January respectively.

“Weaker overall growth stemmed from slower upturns in both output and new orders, with the pace of expansion in the latter at an eight-month low,” Markit said in a note.

Exports, however, grew solidly and at the quickest rate since November 2011. Meanwhile, price pressures remained subdued with charges rising only marginally, driven by fragile demand conditions.

“Signs of fragile demand conditions were reflected in a slower expansion in new business among Russian manufacturers. The modest upturn in new orders was supported by the acquisition of new clients, but it was the weakest in eight months. In contrast, new export orders received by goods producers increased at the fastest pace since November 2011 amid greater demand from foreign clients,” says Markit.

Manufacturing is the worst performing of the PMI indicators. Markit’s composite PMI decreased to a still respectable 54.80 in February from 56 in January and is being buoyed by the robust service sector, but even that has been under pressure in the last month. Russia Services PMI dropped to a three-month low of 55.1 in February from 56.8 a month earlier.

In an effort to attract new clients and amid greater competitive pressures, manufacturers raised factory gate prices only marginally in February, according to the survey. The increase was the weakest for 11 months and was muted in the context of the series history. Meanwhile, cost burdens rose at a faster pace, but one that remained below the long-run series average.

Pressure on prices remains low and Rosstat reported on February 27 that w/w inflation was zero. This has been reflected at the company level as companies kept price rises down in the increasingly competitive environment. Price pressures remained subdued in February, reports Markit, purchasing activity grew only marginally and at the slowest rate for four months.

Buying was reportedly weighed on by weaker upturns in output and new orders. Despite the pace of depletion softening, stocks of purchases contracted strongly in response to the slower increase in purchasing quantities.

Employment levels fell for the second month running. The pace of contraction accelerated to the quickest in almost a year, with backlogs also falling at a modest rate.

Despite the poor index results Russia’s businessmen seem to believe the worst is past, due to the prospects of global growth. Business confidence, increased in February and expectations for a pick up in output reached a five-month high, with panellists linking positive sentiment to higher global demand.

“Following a solid start to 2018, the Russian manufacturing sector saw only a fractional improvement in its overall health in February. Slower growth stemmed from weaker expansions in output and new orders, as well as a faster rate of job shedding,” said Sian Jones, Economist at IHS Markit, which compiles the survey. “Meanwhile, price pressures remained muted in the context of the series history. Charge inflation eased to the slowest rate in 11 months amid signs of fragile domestic demand conditions and greater competition.”

“On a positive note, export growth accelerated and was the fastest since November 2011, reflective of stronger global client demand. Expansion into new international markets was also cited as a key contributing factor behind an increase in the degree of confidence towards the year-ahead outlook for output,” she concluded.