Russia: Manufacturers recover and services increase for seventh consecutive month
September 5, 2016
The IHS Markit Manufacturing indicator recovered the ground lost in July and rose to 50.8 in August after posting a disappointing 49.5 in July. As a result, the indicator remained just above the 50-threshold that separates expansion from contraction in the sector.
The sub-indicators were solid and the upturn was driven by an increase in manufacturing production and a moderate expansion in new orders. However, IHS Markit noted that employment continued to deteriorate and businesses lowered their inventories further in August. Exports of new orders fell, prolonging the decline registered since September 2013. Regarding price developments, Russian goods producers noted that input prices continued to increase in August, although the increase was the softest in four months. Consequently, manufacturers raised their output charges.
The manufacturing index has been lagging behind the Services PMI, which has remained in expansionary territory in the last seven months. Although the Services PMI inched down from 55.0 in July to 53.5 in August, it remained above the crucial 50 no-change mark, which indicates that the sector continues to grow. Firms reported another month of robust growth in new business levels, although the rate of growth moderated from July’s 42-month high. Meanwhile, Russian service providers pointed to capacity pressures, as backlogs of work rose for the second consecutive month.
Author: Ricardo Aceves, Senior Economist