Russian manufacturing sees fastest growth in nearly 18 years in March, PMI shows

MOSCOW (Reuters) - Activity in Russia's manufacturing sector expanded at the fastest rate in nearly 18 years in March, a business survey showed on Monday, as new export business grew for the first time in five months.

The S&P Global Purchasing Managers' Index (PMI) for Russian manufacturing rose to 55.7 in March from 54.7 in February, moving further above the 50 marks that separates expansion from contraction to its highest reading since August 2006.

The sector's revival since the early months of Russia's invasion of Ukraine has largely depended on domestic demand because some markets have shunned Russia.

Moscow is spending particularly heavily on manufacturing, pouring cash into the defence sector to ramp up military production. The defence industry spurred sharper than forecast growth in industrial production in February, data showed last week.

But new export orders increased for the first time since last October.

"Greater foreign client demand reportedly stemmed from expansion into new export markets and new client wins," S&P Global said in a statement, also pointing to the knock-on effect on employment.

"Firms raised employment at the quickest rate since November 2000 and saw a notable pick-up in input buying amid efforts to rebuild stocks."

Vendor performance declined further in March, S&P Global said, with logistics delays and slower deliveries via rail transportation the key factors driving the deterioration.

But that relative blip did not stop firms from registering their strongest degree of confidence in output expectations for five years.

"Optimism was linked to hopes of further upticks in customer demand, as well as investment in new product lines and machinery to improve efficiency," S&P Global said.

(Reporting by Alexander Marrow; Editing by Hugh Lawson)