By Andrey Ostroukh

MOSCOW--Russia's manufacturing sector further deteriorated in July due to poor demand which put pressure on production and new orders, a Markit survey of purchasing managers showed Monday.

The headline manufacturing Purchasing Managers' Index, a gauge of the economy's health, slipped to 48.3 in July from 48.7 in June, remaining below the 50 mark that separates growth from contraction.

"The Russian manufacturing sector continues to broadly stagnate, dragged down by weakness in the capital goods category which is offsetting marginal growth in the consumer and intermediate goods areas," Paul Smith, senior economic at Market, said in comments to the PMI survey.

The survey showed output in the manufacturing sector fell for a third month in a row in July, while a lack of new incoming work and lower production requirements caused inventories of purchases to contract at their sharpest pace in six years.

Inflation in the sector reached a three-month high, with consumer goods producers citing a strong rise in average costs. But output charges declined slightly thanks to competitive pressures and reduced demand.

"Reflective of the subdued economic climate, a number of manufacturers feel the need to cut output prices in a bid to stimulate demand and bolster order books," said Mr. Smith.

Overall, the data fits the broader economic pattern. Russia's economy is suffering its first recession since 2009 as the country feels the impact of Western sanctions and the falling price of oil, which as halved from a year ago.

Write to Andrey Ostroukh at andrey.ostroukh@wsj.com