BBC News

Russian manufacturing growth picks up

image captionStrong demand and rising raw material costs have pushed up prices

Strong demand at home has bolstered growth in Russia's manufacturing sector, a survey has indicated.

Manufacturing expanded in March at the fastest rate since August 2006, according to the HSBC purchasing managers' index (PMI).

Russian manufacturers geared up in response to the strongest rise in new orders since 2008.

The sharp rise in overall demand came in spite of rising prices and weaker exports, HSBC said.

"The PMI report draws a benign picture of fast growing manufacturing that can hardly catch up with the rising demand, increasing employment, and reducing inventories," according to Alexander Morozov, chief economist for Russia and CIS at HSBC.

The PMI reading rose to 55.6 in March, up from 55.2 in February. The new orders index rose to 58.2, up from 57.3 in February. Any figure above 50 indicates expansion.

New jobs

Growth in manufacturing also means new jobs are being created in Russia.

"While export demand growth has eased marginally, domestic demand has picked up strongly, prompting manufacturers to continue active hiring," said Mr Morozov.

Manufacturers have seen costs rise sharply in recent months, with global raw material prices soaring.

But Mr Morozov did not think this would prove a problem for companies.

"Output price growth has accelerated, apparently reflecting the rising ability of producers to pass on still fast rising costs to their customers," he said.