Russia: Services and Composite PMIs rebound further in June
The Russia IHS Markit Services PMI jumped to 47.8 in June, from 35.9 in May, amid easing lockdown measures. Although the upturn marked the strongest result since February, the index remained below the critical 50-threshold, pointing to sustained, albeit moderating, deterioration in operating conditions across the Russian services sector.
June’s improvement was chiefly driven by the gradual reopening of the services sector companies as the pandemic-related restrictions and social distancing measures were being eased. As a result, both output and new orders contracted at a much softer rate in June compared to May as firms cleared backlogs of work and demand showed some signs of stabilization. That said, still-dire overall demand conditions prompted services providers to once again cut employment markedly at the end of Q2. More positively, however, confidence rose on prospects of healthier client demand ahead.
Reflecting the trend in the manufacturing and services sectors, the Russia Composite Output Index rose to 48.9 in June, from 35.0 in May.
Commenting on the result, Sian Jones, an economist at IHS Markit, said:
“Russian service providers signalled a notably slower decline in business activity in June as parts of the sector began to reopen, with the rate of contraction easing further from April’s nadir […] More broadly, combined manufacturing and services output neared stabilisation largely thanks to an expansion in goods production. New business also returned to growth, albeit only fractionally. That said, the damage done in the second quarter looks set to weigh on economic growth as our latest forecast for 2020 indicates an expected 8.6% decline in GDP.”