The sun shines through steam rising from the chimneys of a power plant in Moscow, Russia, November 13, 2019. REUTERS/Maxim Shemetov

MOSCOW, July 1 (Reuters) – Russia’s manufacturing industry remained stable in June as a recovery in domestic demand cushioned the blow from a slump in exports, a survey showed on Friday.

The S&P Global Purchasing Managers’ Index (PMI) edged up to 50.9 from 50.8 in May – above the 50.0 mark that marks growth in activity and continues to recover after fell below 50 from February to April.

Russian industry remains under intense pressure due to Western sanctions imposed in response to Moscow’s decision to send tens of thousands of troops to Ukraine on February 24.

As real manufacturing output in Russia fell in June, S&P Global said, an increase in new orders from domestic companies and increased hiring helped offset the fifth straight monthly drop in exports.

Companies have reported significant logistical challenges and difficulties sourcing raw materials as sanctions hit Russian supply chains.

Renaissance Capital estimates that about a third of Russian exports are affected by Western sanctions, while a strong ruble has also weighed on demand for Russian goods abroad.

The currency is trading at multi-year highs around 52 to the US dollar, boosted by Moscow’s capital controls and falling imports that have capped Russia’s demand for foreign currency.

But firms that took part in the survey remained optimistic that customer demand will pick up, and confidence levels rose for the third month in a row to the strongest since February.

Reuters reporting

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