Page 42 - RusRPTNov20

4.3​ Industrial sectors and trade 4.3.1​ Producers PMI
The seasonally adjusted IHS Markit Russia Services Business Activity Index fell heavily from a month earlier to 53.7 in September after posting 58.2 in August, but still signalling a solid expansion in output.
The latest index reading rounded off a strong quarter for Russian services that bounced back after a record breaking collapse in the first quarter of this year caused by the coronacrisis. The quarterly average for the service sector picked up to the highest level since the opening three months of 2017.
The fall in the services PMI was in parallel with a​ ​fall in the manufacturing PMI that was released a few days ago and saw the headline seasonally adjusted manufacturing PMI fall back below the 50 no-change market to 48.9 in September, down from 51.1 in August.
The contraction in manufacturing was caused by a general souring of sentiment after oil prices fell back from c.$45 to c$40 and the ruble fell heavily from cRUB72 to the dollar to close to RUB80 at the end of September on renewed global risk fears.
Russia has suffered from the proverbial perfect story as domestically it became embroiled in propping up the regime of Belarus' self-appointed president Alexander Lukashenko and the Kremlin was accused of trying to poison anti-corruption blogger and opposition activist Alexei Navalny with Novichok. International the coronavirus (COVID-19) infection rates surged with daily infections doubling from c5,000 new cases a day to over 10,000 – their highest level since the peak of the pandemic in the summer.
Taken together and the decline in the services and manufacturing PMIs dragged down the IHS Markit Composite PMI Output Index, which dropped to 53.7 in September from 57.3 in August, but was still above the 50 no-change mark.
Given the pressure on the economy caused by a falling ruble and falling oil prices, Markit concluded that the on going growth in both services and the composite index was a good result and highlighted that it shows the Russian economy is coping far better with the current crisis than the previous big crises.
Services grow on domestic demand but managers remain cautious
The softer rise in output was often linked to slower but still sustainable new business growth. Total sales were primarily supported by domestic demand, as
42 ​RUSSIA Country Report​ November 2020 www.intellinews.com