Russian factory activity contracts for third month running in August, PMI shows

(Reuters) -Activity across Russia's manufacturing sector declined for the third month running in August, a business survey showed on Monday, driven by falls in output and new orders for both domestic and export markets.

The S&P Global Purchasing Managers' Index (PMI) for Russia's manufacturing sector rose to 48.7 last month from 47.0 in July, but remained below the 50 mark separating contraction from expansion.

Manufacturers cited weak demand and financial difficulties among clients as key factors for the continued contraction in output and new orders, the survey showed. 

Russia's significant spending on 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.

But this year, the sector has run out of steam as Russia's economy slows. New export orders contracted for the fifth time in the last six months in August. 

"Companies highlighted that muted demand from clients in existing markets dampened the inflow of new export sales," S&P Global said. 

Despite the ongoing challenges, employment in the sector returned to growth, with firms hiring more full-time employees and extending shift patterns. August saw the fastest pace of job creation since July 2024.

Manufacturers also reported a renewed optimism about future output, driven by planned investments in advertising and new product launches.

(Reporting by Alexander Marrow; Editing by Toby Chopra)