Post sponsored by NewzEngine.com

MIL OSI Translation. Region: Russian Federation –

06.10.2020

Leading indicators in September 2020 indicated a slowdown in the recovery of business activity in the mining and services sectors, while there was no single picture regarding processing. The immediate prospects for the Russian economy will largely depend on the pace of recovery in domestic demand, and this process is directly related to the speed and scale of the spread of the second wave of COVID-19.

Published yesterday, the September PMI in the Russian services sector, as well as the aggregate output indicator (services and industry) of the Markit agency indicated a slowdown in the pace of business recovery. The composite PMI in September stood at 53.7 points against 57.3 in August (the value of the processing index in September was 48.9 points after 51.1 in August).

A reading of over 50 points continues to indicate growth in output, but in September it was at its lowest level in the three preceding months of Russia’s economic recovery.

The reasons are the subsidence in terms of new orders in industry and the attenuation of their growth in services, the reduction in the hiring of workers and the increase in purchase prices. In both sectors, companies have increased doubts about the duration of the current recovery.

Deterioration was also demonstrated by the Rosstat’s business confidence index, which, taking into account the seasonality, in September decreased by 3.9% (minus 3.1% in August) in production and by 5.6% (minus 5.7% in August) in processing. The decline in confidence in the extractive industries is especially significant for the prospects for economic recovery in September, since in August this sector, in contrast to the processing and consumption of households, showed a noticeable improvement in results (see “Kommersant” from September 21).

Do not make definite conclusions about the state of the industry in September, and analysts of CMASF, which, in addition to PMI, monitor the consumption of electricity and the loading of goods by rail.

“The early indicators tracked indicate either an improvement or a constant situation,” they say. The conclusions of the market research of the Gaidar Institute regarding the state of processing in September are quite positive. There, however, indicate the deterioration of the plans of the companies. According to the institute, after a slowdown in August, the industry resumed its way out of the “virus crisis” in September against the background of improving the dynamics of demand with an increasing scarcity of finished goods stocks – which increased output. “However, the release plans have begun to lose the optimism they had gained in the previous months. And the hiring plans never got it. In anticipation of the second wave of the virus / crisis, the industry abandoned the restoration of investment plans, ”says the author of the study, Sergei Tsukhlo.

Commenting on the September consolidated PMI, Dmitry Polevoy from Lokoinvest notes: “A return from the multi-year highs of August was inevitable, now the pace of further recovery will depend on the situation with incomes of the population and the spread of COVID-19 in the country and in the world.” Economists from Raiffeisenbank agree with him, noting that, as a rule, after the acute phase of the crisis, economic recovery (in the absence of growth factors) slows down rapidly: imports also begin to grow in the face of revival of domestic demand, which is negative for GDP. “The recovery could be supported by exports, investment government spending and the revival of consumer lending, but now the second wave of COVID-19 is a significant risk for these factors,” they conclude.

A source:Kommersant

Read all news  

EDITOR’S NOTE: This article is a translation. Apologies should the grammar and / or sentence structure not be perfect.

MIL OSI Russia News