Russian manufacturing activity grows in September as output rises: PMI

October 3, 2016 2:13 AM EDT

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MOSCOW, (Reuters) - Russian manufacturing activity expanded faster in September, a business survey showed on Monday, driven by the sharpest rise in output in nearly two

years, but orders from abroad tumbled at the fastest rate in more than two years.

The Markit purchasing managers' index (PMI) rose to 51.1 from 50.8 the previous month, moving further above the 50.0 mark that divides expansion from contraction, showing growth in Russia's manufacturing sector for the second straight month.

"Worryingly for firms, demand this month was predominantly supported by domestic clients as the index measuring new business from abroad slipped to a 26-month low," said Samuel Agass, an economist at IHS Markit, which compiles the survey.

"Additionally, employee numbers were reduced, yet this looks likely to reverse in future months since backlogs of work have stabilized and output growth is more robust."

The rate at which new business from foreign clients declined was the fastest since July 2014, according to the survey.

The latest decline in employment extended the current sequence of job cuts to three successive months.

But the outlook could still become positive, Agass said.

"If the upturn in production and new orders can be sustained, then the sector looks set to enjoy a strong finish to 2016," he said.

((Reporting by Lidia Kelly; Editing by Hugh Lawson))

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