Russia: Manufacturing sector remains lackluster; services sector loses steam in March
April 4, 2018
Business conditions in Russia’s manufacturing sector improved modestly in March. The manufacturing Purchasing Managers’ Index (PMI), produced by IHS Markit, rose from 50.2 in February, the worst result since July 2016, to 50.6. As a result, the PMI lies only slightly above the 50-threshold that separates expansion from contraction in business activity in the sector. For Q1 as a whole, the manufacturing PMI recorded the worst average since Q3 2016 signaling subdued activity in Russia’s manufacturing sector.
According to IHS Markit, growth in output expanded healthy in March, although new orders lost steam pointing to fragile demand. Spare capacity caused backlogs in work to fall and firms also shed jobs, albeit only modestly. Higher prices for raw materials caused cost burdens to rise at the sharpest race since October, although inflationary pressures overall remained modest in the context of historical data. Business confidence also dipped in March.
Meanwhile, activity in the services sector lost pace in March. The Services Business Activity Index produced by IHS Markit fell from 56.5 in February to 53.7, the lowest reading since July 2017. Despite the fall, the indicator remains firmly in expansionary territory.
Russia Fixed Investment Forecast
FocusEconomics Consensus Forecast panelists project fixed investment will expand 2.7% in 2018, which is unchanged from last month’s forecast. In 2019, the panel expects fixed investment to also grow 2.7%.