(Reuters) - Activity in Russia's manufacturing sector contracted for the first time in more than two years in September, a business survey showed on Tuesday, driven by declines in output levels, new orders and employment.
The S&P Global Purchasing Managers' Index (PMI) for Russian manufacturing fell to 49.5 from 52.1 in August, moving below the 50 level that separates expansion and contraction for the first time since April 2022.
"The decrease in production was linked to subdued demand conditions and supplier delivery delays which led to input shortages and hampered output," S&P Global said in a statement.
Russia's significant spending on producing military equipment and weapons since invading Ukraine in February 2022 has buoyed a manufacturing sector that otherwise may have suffered as some countries shunned Moscow.
Gradually Russian manufacturers have managed to find new export markets, and the pace of new export order growth quickened to its fastest since August 2023 in September, reportedly stemming from stronger demand from Central Asia, S&P Global said.
Supply chain problems and labour shortages became more pronounced, the survey showed, with some firms highlighting a lack of skilled candidates for job vacancies.
"Supply chain issues including delays to rail transportation and international logistics led to a sharp deterioration in vendor performance in September," S&P Global said.
Expectations of future output remained elevated, though they eased to their lowest since February 2023.
"Optimism was due to hopes of stronger demand conditions, alongside planned investment in new products and expansion in production facilities," S&P Global said.