Recovery In The Rouble Sours Business Sentiment - MNI Russia Business Sentiment Eases To 46.0 In April

Sentiment among our panel of large Russian companies declined in April as the brisk appreciation of the rouble proved detrimental to the business environment.
 
The MNI Russia Business Sentiment Indicator fell by 5.7% to 46.0 in April from 48.8 in March, marking the eighth consecutive month that sentiment has been below the 50 level. Just over 80% of our panel thought that overall business conditions had not changed since March, while 13.1% of respondents reported that they had worsened.
 
The recent appreciation in the exchange rate was taken negatively by our panel, with the vast majority reporting that the rouble was hurting rather than helping their business. The indicator measuring the impact of the rouble exchange rate on businesses hit a series low in April.
 
In spite of the decline on overall sentiment, there were noticeable pick-ups in orders and output. New Orders increased by 9% to 48.3 in April. While still in contraction it was the highest since January. Export Orders increased to the breakeven 50 mark in spite of complaints that the currency was hurting business. Production also increased to the highest since January, rising to 49.5 from 47.8 in March. Inventories of finished goods continued to pile up, although at lower rate than in March.
 
While fewer firms faced higher input costs in April, slightly more chose to raise the prices of their own goods and services after having been less willing in late-2014 to pass on higher costs.
 
Firms reported a further improvement in credit conditions with the Availability of Credit Indicator increasing to 49.5 in April from 46.0 in March, back close to the 50 breakeven mark. Companies also reported that their financial situation had improved on the month.
 
Commenting on the latest survey, Philip Uglow, Chief Economist of MNI Indicators said, “Business sentiment remains weak although there are signs of improvement in the latest survey with orders and output picking up. There has also been a significant improvement in credit availability lately. Following the steady downward decline in most of the key series in the survey seen over the past year, the April data show some stabilisation and raises the possibility that the downturn in February could prove to be the trough.”

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