Russia PMI

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Russia: Leading indicators improve modestly in April

May 7, 2015

The manufacturing Purchasing Managers’ Index (PMI) elaborated by HSBC edged up from 48.1 in March to 48.9 in April. Despite the improvement, the indicator remained below a 50-threshold that separates expansion from contraction in business activity in the sector for the fifth consecutive month. According to HSBC, “[o]perating conditions for Russian manufacturers remained challenging during April, particularly for those in the investment goods sector.”

April’s less negative reading showed that manufacturing production increased modestly over the previous month. HSBC also noted that, “some manufacturers found that clients were undertaking a degree of import substitution and choosing to purchase where possible from Russian producers rather than those based abroad” as a weaker ruble increased the price for imports. That said, new orders were the primary drag on growth in April, falling to the lowest level in six years. The contractions were mainly seen in the production of capital goods.

Simultaneously, the services PMI improved in April. The indicator climbed from 46.1 in March to 50.7 in April. According to HSBC, the reading “signaled a return to growth in April” since the indicator now sits slightly above the 50-threshold, which indicates a mild expansion in the sector. HSBC noted that, “[s]ervices companies mainly linked the improvement in activity to higher new orders.” In addition, new business rose over the previous month and “returned to growth in April, ending a seven-month sequence of contraction.” HSBC concluded that, “there was a welcome stabilization of the Russian service sector in April as activity and new orders ticked up following sharp contractions earlier in the year and business sentiment picked up again. […] Companies and workers alike need client demand to keep improving, however, as there remains evidence that spare capacity is leading to job cuts.”

FocusEconomics Consensus Forecast panelists see fixed investment contracting 2.9% in 2015, which is down 0.7 percentage points from the previous month’s estimate. For 2016, the panel expects fixed investment to increase 2.0%.


Author:, Senior Economist

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Russia PMI April 2015 1

Note: Markit HSBC Purchasing Managers’ Index (PMI). A reading above 50 indicates an expansion in business activity while a value below 50 points to a contraction.
Source: Markit and HSBC.


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