Page 36 - RusRPTOct21

Taken together the composite PMI output index was also dragged down to below the no-change mark and posted 48.2 in August, down from 51.7 in July, to signal the first decline in Russian private sector business activity in 2021 so far. The fall in output was broad-based sector.
The fall in the services PMI is especially telling as services were in the front line when the pandemic hit and the PMI collapsed to unprecedented record lows in the 30s last spring. However, as the lockdown restrictions were removed at the end of summer itouncedack strongly and kept the PMI index buoyant since.
“The latest data signalled the first decline in Russian service sector output since December 2020, albeit only marginal overall. Where a decrease in business activity was reported, firms linked this to softer demand conditions and a further slowdown in new order growth,” Markit said in a press release.
Some firms reported softer demand conditions as the economic rebalancing post-shock establishes itself. The PMI results tally with the universal projections by economists that growth will slow in the second half of this year after 10.3% GDP growth year-on-year in the second quarter – a new all time record,eating out the previous 10% gain in 1999 after the 1998 financial crisis.
However, the Central Bank of Russia (CBR) remainsullish on economic growth predicting 4-4.5% in 2021, 2-3% in 2022 and 2023, and just issued its forecast for 2024 of 2-3%. The official CBR macroeconomic forecasts are here.
The CBR also predicts annual inflation at 5.7-6.2% in 2021, 4-4.5% in 2022, 4% in 2023. The price of Urals oil is projected at $65 perarrel in 2021, $60 in 2022, and $55 in 2023.
The decline in services was the first in 2021 to date as new order growth eased to only a fractional pace, Markit reports.
“Foreign client demand was a source of strength, however, as new exportusiness rebounded back to growth. That said, less robust demand conditions domestically weighed on companies' decisions to hire additional staff as employment fell. The decrease coincided with a sharp depletion in backlogs of work, which signalled little pressure on capacity. At the same time,business confidence dropped to a nine-month low amid concerns regarding inflation and future demand,” Markit reports.
Unemployment has fallen steadily since surging in the second half of last year from historical post-Soviet lows to reach a peak of 6.4% of the population in August a year ago. Unemployment was 4.8% in June, the last data available, and while it may tick up in the coming months, it is not expected to surge.
Firms were hesitant to expand their workforce numbers, as employment in
36 RUSSIA Country Report October 2021 www.intellinews.com