Page 54 - RusRPTOct22

Index (PMI) at 52.0, rising from 51.7 in August. “The latest data signalled a modest upturn in the health of the Russian manufacturing sector, and one that was the fastest for three and a half years,” the report said on October 4.
As covered by bne IntelliNews, previously in August the manufacturing PMI showed the strongest improvement in the health of the sector since the launch of Russia's military invasion of Ukraine. But despite a renewed expansion in manufacturing production, broadly unchanged levels of output at service providers weighed on the overall expansion.
Taken together the services and manufacturing PMI for September in the Composite PMI Output Index posted 51.5 in September, up from 50.4 in August, to signal another monthly upturn in private sector business activity.
Despite the extreme sanctions imposed on Russia following the invasion of Ukraine in February Russia’s economy has performed better than expected and the contraction for this year has been downgraded from 8%-15% to somewhere between 4% and 6% according to various estimates. Services have been the last of the major categories to recover.
“Business activity across the Russian service sector returned to growth in September, according to the latest PMI data. The rise in output was only marginal, however, as new orders growth eased to the slowest in the current four-month sequence of expansion,” S&P said.
“Client demand remained domestic focused as sanctions continued to restrict demand from external customers. The resulting relatively muted increase in new business led to decrease in employment, as backlogs of work declined further amid reports of excess capacity. Nonetheless, business confidence picked up due in part to hopes of further upticks in customer demand over the coming months,” S&P added.
Despite the problems unemployment remains at a historical low of 3.9% in August and September. (chart) The decline was often attributed to the impact of sanctions on business operations. The rate of contraction was steeper than the series average. In line with relative muted demand conditions, firms reported a reduction in employment for the second successive month during September, S&P reports.
The pace of job shedding quickened from August and was the fastest since May, albeit being only slight overall. The decrease in employment was in line with signs of spare capacity, as evidenced by a further decline in backlogs of work in September.
Inflation remains high, but thanks to the quick response of the CBR in the first days of the war inflation peaked in April and has fallen in the last few months. However, economists are expecting it to rise again towards the end of the year
54 RUSSIA Country Report October 2022 www.intellinews.com