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Russia's Manufacturing Sector Contracts Most Since 2009

Russia's manufacturing sector shrank at the fastest pace in more than a decade on weak demand and production in November, survey data from IHS Markit showed Monday.

The manufacturing Purchasing Managers' Index fell to 45.6 in November from 47.2 in October. A reading below 50 indicates contraction. Moreover, this was the lowest since May 2009.

A key factor behind the sustained contraction was a further fall in production. The decrease in output was linked to a slump in client demand.

Subsequently, firms noted a lower degree of confidence towards the outlook for output over the coming year in November.

Cost burdens climbed at the slowest pace since February 2017, as weaker demand for inputs reportedly led some suppliers to offer discounts. Firms increased their factory gate charges only marginally amid efforts to remain competitive.

"Our current industrial production forecast points towards a slowdown in output in the final quarter of 2019 and during the opening months of 2020 as muted domestic consumer spending is expected to weigh on the expansion," Siân Jones, an economist at IHS Markit, said.

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