Russia PMI September 2016


Russia: Upturn in manufacturing continues while activity in services eases

October 5, 2016

Business activity in Russia’s manufacturing sector continues to show signs of improvement. The Manufacturing Purchasing Managers’ Index (PMI) produced by IHS Markit rose from 50.8 in August to 51.1 in September, which was the second consecutive improvement. The indicator is now further above 50, indicating that the sector remains in expansion mode.

In a press release, IHS Markit attributed the upturn in the sector to “the sharpest rise in production for 22 months, while new order intakes also increased at a solid pace.” The increase in output reflected higher demand for Russian manufactured goods and the introduction of new products. Demand stemmed mainly from the domestic market as new exports continued to decrease. Despite an increase in production, however, Russian goods producers decided to further reduce their staff levels. Meanwhile, firms indicated that input and output prices continued to rise in September.

Meanwhile, business activity in the services sector moderated for a second consecutive month in September. The Services Purchasing Managers’ Index edged down from 53.5 in August to 53.0 in September. This marked a four-month low and reflected weaker growth in new business and an increase in unfinished work and further job cuts. Markit commented that, “Russia’s service providers ended the third quarter on a weaker footing, as business activity growth eased to a four-month low during September. However, the average through the third quarter was still solid and capped off the strongest quarterly upturn in the sector for just over three years.”

Analysts surveyed by FocusEconomics expect the Russian economy to continue contracting in 2016, although at a more moderate pace than in 2015. Our panelists project that Russia’s GDP will fall 0.6% 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 September 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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