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Russia: Manufacturing and Services PMIs indicate contraction in December

December 30, 2014

The manufacturing Purchasing Managers’ Index (PMI) elaborated by HSBC fell from 51.7 in November to 48.9 in December, which marked the lowest level since May 2014. Readings below the 50-threshold indicate an overall contraction in business conditions in the manufacturing sector.

December’s result reflected a fall in new orders as well as in new export orders, which decreased for the 16th consecutive month. According to HSBC, the fall in new orders, “resulted in a halt to production growth in December, following six months of increases.” In addition, HSCB pointed out that, “input price inflation accelerated for the fifth month running in December, hitting the highest since October 1998” and concluded that, “it was also the second-strongest rate of inflation in the survey history.” HSBC also stated that the survey showed a decrease in employment and the rate of decline in December was the fastest since May.

The services PMI increased slightly in December, from 44.5 in November to 45.8. Despite the increase, the index remained below the 50-threshold for a third consecutive month, indicating contraction in the services sector. HSBC stated that, “services business expectations sank to the lowest on record in December.” Moreover, the survey showed that, “inflationary pressures continued to intensify in December, linked mainly to the weakening of the ruble.” In addition, new business inflows fell at the fastest pace since May 2009. HSCB concluded that, “lack of demand, financing difficulties at customers, economic instability, inflation and the impact of sanctions are the factors that respondents said had weighed on the service sector’s performance and negative outlook.”

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 2015, the panel expects fixed investment to increase 2.0%.


Author:, Senior Economist

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Russia PMI December 2014

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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