Page 31 - RusRPTApr19

drove the latest expansion. New business from abroad also increased for the fifth successive month in February.
As a result, the Composite Output Index (accounting for both services and manufacturing) registered 54.1 in February, up from 53.6 in January.
"At the composite level, hiring activity quickened to the strongest since May 2011 as panellists signalled a robust degree of confidence in the year-ahead outlook," Markit economist Sian Jones commented on February report.
The degree of optimism among the service providers was one of the strongest over the past seven-and-a-half years, with the business expectations towards the year ahead picking up, according to Markit.
The recent hike in VAT continued to impact upon cost pressures across the Russian service sector in February, with the rate of input price inflation easing from January, but remaining elevated and posting the second-fastest rise since December 2014. Higher fuel and raw material costs were also flagged by panellists as driving the increase in cost burdens.
4.3.2 Corporate profits dynamics
Corporate profits are somewhat off last year’s highs, but still relatively strong. Companies have been more active in raising money from bond markets, while corporate demand for bank credit has remained modest. Even with fairly high interest rates and Western sanctions limiting access to international lenders, the biggest factors depressing investment demand are the uncertain economic outlook and difficult business environment.
Russia’s corporate sector net profit was down 8.5% in 2017 y/y, according to Rosstat. The trend runs counter to GDP growth, which hit 1.5% last year after contracting by 0.2% in 2016.
In nominal terms, net profit reached RUB10.3 trillion ($180bn): some 34.8 thousand organizations brought in profits of RUB12.3 trillion, while another 12.4 thousand faced losses of RUB1.96 trillion. This data does not include
31 RUSSIA Country Report April 2019 www.intellinews.com