MNI Russia Business Sentiment Rises To 51.8 In June - First Rise In Exports Since The Introduction Of Sanctions

Easing inflationary pressures, growing order books and improved access to credit all contributed to the more upbeat attitude of large Russian companies in June, providing additional support for our previous assertion that a turning point in the business environment may have been reached.
 
The MNI Russia Business Sentiment Indicator rose by 1% to 51.8 in June from 51.3 in May, the highest since July 2014. Construction companies were the sole driver of this month’s improvement, while sentiment among those in the manufacturing and service sectors was unchanged on the month.   
 
Companies were considerably more optimistic in their near-term outlook, with the Future Expectations Indicator rising to a 22-month high of 61.3 in June.
 
Export Orders expanded for the first time since July 2014, the month that EU sanctions were imposed on Russia, helping to lift the overall New Orders received by our panel to an eight-month high.
 
Inflationary pressures continued to cool in June, resulting in Input Prices easing to the lowest level this year. Even so, a record number of companies anticipated that they would raise the prices of their own goods and services over the coming three months after having kept them in check for the past year.
 
While the latest rate cut by the Central Bank of Russia occurred after our survey period had closed, the previous three consecutive cuts continued to expand the Availability of Credit to our panel.
 
Commenting on the latest survey, Philip Uglow, Chief Economist of MNI Indicators said, “Against all expectations, the Russian economy continues to exhibit resilience and appears set to head down the long, twisting road to recovery. In addition to the improvement in business sentiment, a growing number of indicators are rapidly regaining the ground lost over the past year in a sign that the worst may have passed.”
 
“While the latest rate cut by the central bank could help strengthen business sentiment further, the extension of economic sanctions by the EU threatens to act as a dampener on the recent resurgence in confidence.”

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