Page 36 - bne IntelliNews monthly country report Russia February 2024

4.3 Industrial sectors and trade 4.3.1 Producers PMI
The seasonally adjusted S&P Global Russia Manufacturing Purchasing Managers’ Index (PMI) posted 54.6 in December, up from 53.8 in November as the performance of the sector improved at the strongest rate in almost seven years, S&P Global said in a note on December 29.
“A further sharp rise in new sales spurred firms to expand input buying and employment at increased rates, as optimism in future output was buoyed by a sustained rise in client demand,” S&P Global said.
However, since April, there’s hardly been any increase in manufacturing output across the Russian economy when figures are seasonally adjusted, and even a slight downtick between September and October, according to Nicolas Trikett.
“This does not mean there is no capacity to sustain further expansions, but rather that the initial increases sustained by rising defence spending, which allowed the complete utilisation of existing plants, are largely over. The same dynamics are observed for the general industrial index of activity, highlighting that substitution is not taking place for consumer products at scale. Rather civilian manufacturing in key industries such as aviation is being subsumed to the war effort. But the initial boost from surging spending is over,” Trikett said in a recent article in Riddle Russia.
The seasonally adjusted S&P Global Russia Services PMI Index registered 56.2 in December, up notably from 52.2 in November as the Russian economy continues to benefit from a military Keynesianism boost.
The rise in business activity was steep overall and accelerated to the sharpest since August in the services sector. Service provider panelists said that greater output stemmed from strong demand conditions and a faster upturn in new business from both domestic and international customers.
Combined, the S&P Global Russia Composite PMI Output Index was 55.7 in December, up from 52.4 in November, to signal the sharpest expansion in business activity for four months.
Any result above the no-change 50 benchmark is an expansion.
Inflation remains the main bugbear and cost burdens continued to increase at a marked pace in both services and manufacturing. However, the rate of inflation slowed to the weakest in six months, according to S&P Global.
36 RUSSIA Country Report February 2024 www.intellinews.com