01.09.201402:51:25UTC+00Manufacturing in Russia grows despite Ukraine

Data shows that, even with tensions between Russia and its neighbors in Europe persisting, the country’s manufacturing sector grew by a slight margin last month.

According to the HSBC purchasing managers index (PMI), Russia’s manufacturing sector, which builds up 16% of its economy, maintained its score of 51.0 to stay above the 50 mark that separates expansion from contraction. Among the gains recorded by the index were the increase in output for the third straight month as well as the rise of new orders which was at its fastest in nearly a year. Russian output originally declined for five straight months this year before experiencing its ongoing rally. Unemployment in the country, however, rose for the 14th consecutive month.

Chief economist for Russia Alexander Morozov from HSBC says that, "The Russian manufacturing sector held up well in August, continuing its slow expansion.” The continued improvement relied heavily on domestic demand which has buoyed the sector from being pulled down by export orders which has declined steadily throughout the year.

Morozov added that, "The consumer goods sector was a clear outperformer, reporting not just output growth, but also a strong rise in new work, a rise in new export orders, and an increase in outstanding business." Import substitution was responsible for the gains made in consumer related sectors under manufacturing, but Morozov warned that a prolonged period of this trend could damage the economy through more expensive living costs.