Page 30 - RusRPTDec18

It implies the contribution of oil-triggered inflation at about 11pp out of the +16.1% y/y total growth.
4.3 Industrial sectors and trade 4.3.1 Producers PMI
The recovery of Russia’s manufacturing sector, until now the weakest part of the economy, showed signs of building up some momentum in November as the IHS Markit manufacturing PMI index put in its second strong showing in a row. The index rose to 52.6 (the red line in the chart below) from 51.30 a month earlier, well above the 50 no-change mark, Markit said in a press release on December 2.
“The latest index figure signalled the second successive improvement in the health of the sector and the strongest overall upturn in nearly a year-and-a- half,” Markit said.
Russia’s manufacturing sector has been struggling all year and the manufacturing PMI has been below the 50 mark since April. In the first quarter it managed to show growth, according to Markit’s panellists, but only just. The service sector (and also the composite index) have been doing much better and returning strong results all year, partly based on Russia’s booming tech sector and expanding e-commerce.
The improvement in the manufacturing PMI is mirrored in the recent industrial production numbers, which have also improved in the last months. Industrial production expanded by 3.7% in October, the last data available, up from 2.1 in September. Industrial production has been stronger in the second quarter with results over 2%, up from results around 1% in the first quarter.
The improvement in manufacturing and industry has been supported by both the higher than expected price of oil and also slowly recovering real incomes. However, oil prices have taken a hit in the last month falling to around $50 in November from over $80 a month before. Incomes have also failed to grow very fast. The November results may be the last strong results of this year, as the fall in oil prices could take the wind out of the economy’s sails in December.
30 RUSSIA Country Report December 2018 www.intellinews.com