MNI Russia Business Sentiment Indicator: Russia Business Sentiment Falls Into Contraction - External Conditions Drive Down Russia Business Confidence

The MNI Russia Business Sentiment Indicator fell to 41.3 in January from 50.0 in December, leaving it not too far off the record low of 37.1 recorded in November. Sentiment is now 16.1% down on the year.
 
Headline confidence was rocked by the onslaught of negative news currently impacting Russia. Wider business conditions are clearly being buffeted by the sharp decline in the oil price and the ensuing drop in the rouble. Firms reported that the currency was causing them more pain than ever before in the survey’s history. The Effect of the Rouble Exchange Rate Indicator fell to a record low of 34.0 in January from 39.5 in December.
 
Apart from the drop in overall sentiment, the standout figure this month was a sharp decline in Availability of Credit to 39.8 from 45.8 in December. Moreover, expectations for the next three months hit a record low.
 
Panellists were also increasingly pessimistic about overall business conditions in the coming three months with the Future Expectations Indicator declining to a record low of 33.0 in January from 37.6 in December.
 
While headline confidence fell sharply, key activity measures declined more moderately. New Orders and Production hovered around the 50 mark. Employment managed to put in a small increase back to the 50 level following two months in contraction.
 
Current price measures remained stable in January with Input Prices and Prices Received remaining at 50.8 and 53.5 respectively. Expectations for the future crept higher, though, with the Future Expectations Indicator for Input prices ticking up to 57.0 from 56.8. Prices Received increased to 60.6 from 60.1 in the previous month.
 
Commenting on the latest survey, Philip Uglow, Chief Economist of MNI Indicators said, “The latest survey showed business sentiment falling sharply as concerns over the weakness of the Russian rouble mounted and credit channels tightened further. It’s no secret that Russia’s fortunes are tied to the oil price and it’s difficult to see things improving unless we see a recovery in prices and stabilisation in the currency.”

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