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Russian business sentiment recovered slightly in June from a five month low in May, although was still considerably down from the start of 2014, as business confidence has been hit by the sanctions from the US and EU, amid an already sharp slowdown in economic growth.
The MNI Russia Business Indicator rose to 50.5 in June from 49.2 in May, although it was 12.6% below the level seen in June 2013. Russian business sentiment bottomed out in the final quarter of 2013 and bounced back at the start of the current year boosted by the Sochi Olympics. In Q2 2014, confidence was 8.8% below the previous quarter and15.2% below the corresponding period a year ago.
Both Production and New Orders rose marginally in June, with the former now in-line with the average since the survey began in 2013. The Export Orders Indicator picked up to 49.0 in June from 46.9 in May, still below the breakeven 50 level, but up from44.4 in April.
The current weak economic conditions, coupled with the tensions in Ukraine, have created a highly uncertain business environment in which companies have been running down stocks. In Q2 2014, the level of inventories averaged the lowest since thestart of the survey.
Commenting on the latest survey, Philip Uglow, Chief Economist of MNI Indicators said, “Business sentiment has weakened over the past year considerably, although June showed some signs of stabilisation. While the situation in Ukraine rumbles on, the rhetoric and action on sanctions has calmed, easing some concerns from businesses.”
