Russia is getting closer to pulling out of its recession

Russia is getting closer to pulling out of its recession.

A preliminary estimate showed that Russia's GDP dipped by 0.2% in 2016, according to the Federal Statistics Service.

This was above expectations of a contraction of 0.5%, according to the Bloomberg consensus.

The estimate "is consistent with the idea that the economy returned to positive growth in the final quarter of last year," William Jackson, senior emerging markets economist at Capital Economics, wrote to clients.

Russia's economy has been slowly climbing back after a sluggish 2015 and 2016 amid lower oil prices and economic sanctions.

Taking a look under the hood, data suggests that two industries in particular pushed the economy forward: Manufacturing rose by 1.4% in 2016 and the production of natural resources was up by 0.2%.

However, on the flip side, consumption remained weak. Wholesale and retail trade dropped by 3.6%.

Additionally, the Federal Statistics Services also revised 2015 GDP to a 2.8% drop, compared to the prior estimate of a 3.7% contraction. This revision "appears to be due to the inventory cycle exerting a smaller drag on growth," suggested Jackson. "According to today's GDP figures, gross capital formation fell by much less than previously thought (-13.0% versus -20.9%), whereas fixed investment actually fell more."

Separately, Russia's Markit manufacturing PMI came in at 54.7 for January, up from the prior reading of 53.7. A reading above 50 indicates growth in the manufacturing industry. The report noted that firms saw the strongest manufacturing upturn since March 2011 and backlogs of work accumulated at the sharpest pace in almost ten-and-a-half years.

"Russian manufacturers carried the momentum they built up during the closing stages of 2016 through to the new year, as firms recorded the sharpest improvement in operating conditions for nearly six years," Samuel Agass, economist at IHS Markit, wrote in the report.