(This content was produced in Russia where the law restricts coverage of Russian military operations in Ukraine)
MOSCOW (Reuters) - Activity in the Russian manufacturing sector increased in August at the fastest rate since January, driven by stronger domestic demand that boosted sales, a business survey showed on Thursday.
The S&P Global (NYSE:SPGI) Purchasing Managers' Index (PMI) rose in August to 51.7 from 50.3 the previous month, climbing higher above the 50.0 mark that separates expansions in activity from contractions.
Output in the sector increased in August after six months of contraction that began in February, the month when Russia sent tens of thousands of troops into Ukraine, triggering unprecedented western sanctions on Russia.
The uptick in output was linked to stronger client demand and an increase in new order inflows, S&P Global said in a monthly survey.
The increase in new sales in August was the fastest since April 2019 as companies cited the acquisition of new customers and stronger client demand in the domestic market.
But new export orders fell for the seventh month in a row and the rate of contraction reached a three-month high.
Cost burdens continued to rise in August but at their slowest pace since February 2020, while firms raised their selling prices to pass on greater costs to clients.
Business confidence among Russian manufacturers remained upbeat even though economic hurdles remained, the survey showed.
"Optimism was reportedly driven by hopes of greater client demand and investment in marketing and advertising. The degree of confidence was below the series average, however, as economic uncertainty weighed on sentiment," S&P Global said.