Russia PMI August 2016


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.

Following the economy’s collapse in 2015, analysts surveyed by FocusEconomics expect the Russian economy to continue contracting in 2016, although at a more moderate pace. FocusEconomics Consensus Forecast panelists project Russia’s GDP to fall 0.7% in 2016, which is up 0.1 percentage points from last month’s forecast. Panelists expect the economy to expand 1.3% in 2017.

Author:, Senior Economist

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Russia PMI Chart

Russia PMI August 2016

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

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