Russia: Activity in manufacturing and service sectors strengthens in November
December 5, 2016
Activity in Russia’s manufacturing sector expanded at the fastest pace in over five years in November, as suggested by the Manufacturing Purchasing Managers’ Index (PMI) produced by IHS Markit. The indicator rose from 52.4 in October to 53.6 and contrasted the 51.5 the markets had expected. The fact that the indicator moved further above 50—the threshold that separates expansion from contraction in the sector—signals that manufacturing activity is gaining momentum.
IHS Markit commented that, “Russia’s manufacturing sector is moving from strength to strength as we approach the end of 2016. The sector’s growth is being fueled by greater domestic demand for Russian goods, which in turn is translating into substantial production increases. Firms are also experiencing sufficiently low cost pressures to allow them to solidly raise their buying activity in an effort to sustain this expansion.” November’s result strongly contrasts readings at the beginning of 2016, when Russian goods producers struggled to contend with waning demand and stark depreciation of the ruble, which prompted steeper inflation.
Regarding services, businesses signaled that their activity improved in November. According to IHS Markit, the Services Purchasing Managers’ Index rose to 54.7 in November from 52.7 in October. The improvement mainly reflected that growth in activity and new business strengthened from the previous month. IHS Markit noted that, although business confidence improved further in November, service firms continued to shed workforce numbers. On the prices front, higher input prices were reflected in a further increase in selling prices.
Author: Ricardo Aceves, Senior Economist