The Russian Manufacturing Purchasing Managers Index (PMI) sharply deteriorated in March 2022, with the rate of decline after the military invasion of Ukraine accelerating to its fastest since the early stages of the coronavirus (COVID-19) outbreak in May 2020.

The seasonally adjusted S&P Global Russia PMI (former IHS Markit Russia PMI) posted 44.1 in March, down from 48.6 in February, and below the 50.0 no-change mark, indicating contraction.

As reported by bne IntelliNews, Russian goods producers registered a marginal improvement in the health of the sector at the start of 2022.

But “the latest data signalled the sharpest decline in operating conditions across the Russian manufacturing sector for almost two years. The headline index was partially supported by a series record deterioration in vendor performance (ordinarily a sign of improving operating conditions),” the report noted.

The downturn was driven by notably sharper decreases in production and new orders amid muted foreign and domestic client demand. Subsequently pressure on capacity waned and firms continued cutting jobs, with employment falling at its joint fastest pace in almost two years.

A separate report from RBC business daily citing a survey by NAFI think-tank claimed that two thirds of Russian SMEs have cut their personnel costs in March.

Notably, severe material shortages alongside soaring vendor prices led to the fastest rise in input costs in the series' history. The selling prices were increased at a record pace as a result.

At the same time, a reduction in pressure on capacity for Russian manufacturers was reflected in the fastest decline in backlogs of work in 2022 so far. The strong contraction in work-in-hand led firms to cut back on hiring and lower their workforce numbers at the joint quickest pace for almost two years.

“Finally, expectations regarding the outlook for output over the coming year remained upbeat in March. That said, the level of optimism dropped to the lowest in the current 22-month sequence of positive sentiment,” according to the report.