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Russia's manufacturing activity deteriorated the most in over a decade in September, as production and new business shrunk sharply, survey data from IHS Markit showed on Tuesday.

The purchasing managers' index, or PMI, for the manufacturing sector fell to 46.3 in September from 49.1 in August. The reading was the lowest since May 2009. Any reading below 50 indicates contraction in the sector.

The quarterly average of 48.2 signaled the worst performance across the sector since the second quarter of 2015, IHS Markit said.

Both new business and production decreased at the fastest rates since April 2009, due to weak demand and difficulties in gaining new clients. New export orders declined at the quickest pace in three years, partly driven by increased competition for clients.

Employment declined at the sharpest pace since May, falling for the second straight month, due to weaker production requirements and redundancies. Backlogs of work decreased further at a sharper rate.

On the price front, input price and output charge inflation eased in September.

Business confidence fell to the lowest since the end of 2017, due to weak demand and the loss of clients.

"Subdued inflationary pressures, lower domestic demand and a global manufacturing slowdown have been highlighted by the Central Bank of Russia as key factors behind the recent cut in interest rates," IHS Markit economist Sian Jones said.

"We also expect further reductions to the policy rate going into 2020."