MNI Russia Business Sentiment Indicator: Russia Business Sentiment Bounces Back In December - Both Production, New Orders Above The 50 Level

The MNI Russia Business Sentiment Indicator bounced back sharply to 50.0 in December from a record low of 37.1 in November. While the swiftness of the bounce back suggests last month’s lurch lower was an anomaly, a sharp fall in expectations in December to 37.6 from 41.4 shows businesses remain very concerned about the future.

The sharp fall in the MNI Russia Business Sentiment Indicator in November and subsequent rebound in December was also mirrored, albeit with a lower magnitude, in the key activity measures of Production and New Orders. One possible explanation to last month’s drop was that the downing of a Russian passenger jet in Egypt and Russia’s entry into the Syrian conflict had a knee jerk downward impact on sentiment. Whatever the cause, Production moved back into expansionary territory at 52.3 in December. Leave aside the November outlier, Production has actually been above 50 since July, having trended up from a record low of 41.5 in February.

New Orders pushed a little back over the 50 breakeven mark to 50.8 in December from 43.5 in November. Orders have not fared quite as well as Production in recent months which suggests the current rate of output growth could prove unsustainable. This view is furthered bolstered by panellists’ views on both output and orders over the coming three months which both fell to record lows in December.

Labour hoarding has been a feature of 2015 with companies reluctant to let employees go despite lower demand. November's outturn of  48.3 marked a significant divergence from this trend and while the Employment Indicator bounced back to 49.5 in December, it is below the 2015 average of 49.8.

Companies continued to judge that the current weakness in the currency was a negative for business. And having improved most of the year until September credit availability remained below the 50 neutral level for the third consecutive month and was also below the average of 2015.

Commenting on the latest survey, Philip Uglow, Chief Economist of MNI Indicators said, “Overall the latest data are consistent with the fragile stabilisation in conditions seen in recent months and a slow recovery for the Russian economy. Given the weakness in some of the expectations measures in the survey there is a risk that conditions could worsen again over the short-term.”

Download Full Report