While Russia's manufacturing PMI in July rebounded from a slowdown in June, the activity in the services sector, on the contrary, slipped in July, Markit Russia Services Business Activity Index published on August 3 shows.

This continues the mismatch between services and manufacturing that has been persistent in PMI readings since the bumpy recovery started in Russian business conditions at the end of 2016.

The Services PMI in July posted a reading of 52.6, down from 55.5 in June, showing an expansion in the sector below the long-run series average. Thus, despite a stronger Manufacturing PMI, the Markit Composite Index (covering both manufacturing and services) posted 53.4 in July, down from 54.8 in June and the weakest composite output expansion in ten months.

In services, output growth was only moderate and slowest in more then 12 months. A number of service providers linked the upturn in output to higher new orders, but other respondents raised concerns regarding relatively weak demand for their products.

"In line with weaker expansions in business activity and new orders, the degree of optimism in the sector was the weakest so far this year," Markit economist Sian Jones commented, adding that "although still largely confident about the coming 12 months, some firms raised concerns about future market conditions".

Manufacturers in the latest PMI survey also showed optimism levels were at their lowest since January linked to uncertainty regarding future output. A decline in optimism in the sector was also confirmed by an independent survey by Gaidar Institute published in Vedomosti on August 1.

"IHS Markit's latest forecast places industrial production growth for the second quarter at 2.4% year-on-year, following broadly no change in the first quarter," according to Jones, who believes that "fluctuations in growth seen in both official and PMI data support the overall industrial production expansion forecast of 2.0% in 2017".

Markit forecasts year-on-year GDP growth for the third quarter to be 1.6%, lower than the 3.2% expected in the second quarter.

Related Content

Bankers reassessing accelerating climate crisis in anticipation of trillions of dollars of annual damage

Putinomics: Russia’s oil and gas revenue to double in April

US secretly sent long-range missiles to Ukraine in February

Bankers reassessing accelerating climate crisis in anticipation of trillions of dollars of annual damage

Putinomics: Russia’s oil and gas revenue to double in April

US secretly sent long-range missiles to Ukraine in February