Page 28 - RusRPTJul19

4.2.2 PPI dynamics
Producer prices also followed consumer prices down in May. PPI reached 8.6% in May, down from 10.7% in April. Producer prices have been driven up this year by the cost of fuel and inputs.
4.3 Industrial sectors and trade 4.3.1 Producers PMI
The wind has gone out of Russia’s service sector that has been the one vibrant part of the real economy for the last few years, dragged down by stagnant real income growth and miasma that is lying over the retail sector.
The IHS Markit Russia Services Purchasing Managers Index (PMI) posted 52.0 in May, slightly down from 52.6 in April, but still above the 50 no-change mark. While the service sector is still expanding the rate of growth has considerably softened compared to the robust growth of the last few years.
“May survey data signalled a moderate rise in business activity across the Russian service sector. But the upturn was the slowest since May 2016 amid signs of softer domestic demand conditions and only a modest increase in new business,” Markit said in a press release.
The slower rise in new orders contributed to the first fall in employment since last September, as backlogs of work continued to decrease.
The good news is new export orders grew at a strong rate and price pressure was low as the effects of the VAT hike by 2pp in January are already wearing off.
28 RUSSIA Country Report July 2019 www.intellinews.com