A view shows the Moscow City business centre behind the Kremlin wall in Moscow, Russia, February 24, 2025. REUTERS/Evgenia Novozhenina

MOSCOW (Reuters) -Russia's manufacturing sector contracted slightly faster in September than the previous month as both output and new orders shrank more quickly, a survey by S&P Global showed on Wednesday.

The S&P Global Russia Manufacturing Purchasing Managers' Index (PMI) fell to 48.2 in September from 48.7 in August, marking the fourth consecutive month of decline. PMI readings below 50 indicate contractions in activity.

The drop in production was attributed to weaker demand conditions, with new orders falling at the steepest rate since November 2022. Financial difficulties among clients and hesitancy in purchasing were cited as key factors affecting sales.

Employment in the sector also saw a renewed decline, driven by resignations and the non-replacement of voluntary leavers. The pace of job losses was modest but the steepest since March.

Despite the downturn, manufacturers expressed stronger optimism for the year ahead, with confidence reaching its highest level in four months. This optimism was supported by plans for new product development and hopes for improved demand conditions.

Cost pressures intensified, with input prices rising at the fastest pace in four months, driven by supply chain strains and unfavourable exchange rate movements.

However, the rate of increase remained below historical averages, and firms endeavoured to pass on higher costs to customers through very slightly increased selling prices.

The survey highlighted ongoing challenges for Russian manufacturers, including supply shortages and logistical issues, which contributed to longer lead times for inputs. Despite these hurdles, the sector remains hopeful for a rebound in demand.

(Reporting by Gleb Bryanski; Editing by Hugh Lawson)