MOSCOW, Jan 2 (Reuters) - Russia's manufacturing sector contracted for the fifth month in a row in December, with the VTB Bank Europe purchasing managers' index (PMI) falling to the lowest level in the survey's 11-year history.
The current manufacturing slowdown is sharper than during the 1998 financial crisis, which saw bank collapses, a plunge in the rouble exchange rate and a default on sovereign debt.
The headline PMI fell to 33.8 in December from 39.8 in the previous month, moving further below the 50.0 mark that separates expansion from contraction. That was the lowest reading since the survey began in September 1997.
"Eight of survey's sub-indices registered historic lows -- including output, new orders and purchases -- suggesting a steeper rate of contraction than that seen during the financial crisis of a decade ago," said Dmitri Fedotkin, economist at VTB Bank Europe Research.
"The sharp deterioration in business conditions has also been reflected in a substantial weakening input and output prices, which declined at series-record rates", he added.
Russia's once-buoyant economy has been hard hit by falling oil and commodity prices, slowing demand for exports due to the global financial crisis, and by the global credit crunch which has made it hard for companies to attract new funding.
Economists now forecast that 2009 could bring a recession.
The PMI employment index fell to a series low of 32.2, as manufacturers cut staff for the eight month in a row.