Russian composite output stagnates as services PMI contracts in November

Russian composite output stagnates as services PMI contracts in November
Russia's services PMI recovered somewhat in November but was still in contraction, while the composite PMI is perfectly flat at the no-change 50 mark. The manufacturing PMI, however, is expanding at its fastest level in over five years. / bne IntelliNews
By bne IntelliNews December 6, 2022

Despite the sharp improvement of the Russia Manufacturing Purchasing Managers’ Index™ (PMI) seen in November, continued contraction in the services sector has kept the composite output stagnating in the reporting month, the latest Services PMI data from S&P Global showed. (chart)

“A further contraction in service sector output counteracted a solid rise in manufacturing production,” the report said.

The seasonally adjusted S&P Global Russia Services PMI Business Activity Index registered 48.3 in November, up from 43.7 in October, and below the 50.0 no-change mark, indicating contraction. The data showed a marginal contraction in output at Russian service providers, albeit the rate of decline softened notably from that seen in the previous survey period. 

“Where a fall in activity was noted, firms attributed this to weak client demand and another monthly decrease in new orders,” according to the report.

As a result, the Composite PMI Output Index (manufacturing and services combined) posted 50.0 in November, up from 45.8 in October, to signal no change in private sector business activity during the month.

For the service providers, a sharper fall in new business from abroad and decline in foreign customer demand weighed on total sales in November. New orders were broadly unchanged across the Russian private sector as service sector weakness dampened a quicker monthly expansion in manufacturing demand. 

At the same time, business confidence was buoyed by stronger expectations at manufacturers and renewed optimism at service sector firms.

“Although new business contracted for a second month running, Russian service providers registered renewed optimism in November regarding the outlook for output over the coming year,” S&P Global notes.

Confidence was underpinned by hopes of greater client demand and a reduction in competition. The degree of positive sentiment was historically subdued, however.