Russia: Services PMI retreats but remains in expansionary territory in September
October 5, 2020
The IHS Markit Russia Services Business Activity Index fell to 53.7 in September from 58.2 in August. However, the index remained above the critical 50-threshold, suggesting that operating conditions across the Russian services sector continued to improve at the end of Q3, albeit at the softest pace in three months.
September’s downturn was predominantly driven by a weaker increase in new business amid sliding new export orders, which fell for the seventh consecutive month at the end of Q3. In turn, output growth softened in September and the rate of job shedding accelerated to a three-month high. Meanwhile, backlogs of work declined at a faster pace, while output prices rose notably as the rate of cost inflation accelerated..
Similarly, the IHS Markit Composite Output Index fell to 53.7 in September from 57.3 in August.
Commenting on the composite result, Sian Jones, an economist at IHS Markit, said:
"At the composite level, business activity growth eased, as both manufacturing and service sector expansions slowed. Meanwhile, in line with a higher rate of official inflation in August, firms registered quicker increases in average charges for goods and services in September. Panelist reports of currency volatility and cost pressures from supplier price hikes mean we are not likely to see a further interest rate cut by the Central Bank of Russia in the coming months. Our latest forecast expects the base rate to remain at 4.25% for the rest of 2020."
Author: Almanas Stanapedis, Economist