Page 43 - RusRPTJun20

4.3​ Industrial sectors and trade 4.3.1​ Producers PMI
Russia’s IHS Markit Russia Services Purchasing Index (PMI) was up slightly month-on-month to 36.2 in May ​from 31.3 in April, but still well below the 50 no-change market, as the services sector has been crushed by the coronacrisis.
The latest headline figure signalled the second-sharpest deterioration in operating conditions across the Russian manufacturing sector since early-2009, Markit reports.
“Driving the decline in overall sector performance was another severe monthly decrease in production during May. Although less marked than April's record, the decline in output was among the strongest for over 11 years. The downturn was commonly linked to weak demand conditions and smaller order volumes due to lockdown measures,” Markit said in a press release.
More damage is on the way as incomes are expected to fall going forward.​ Wage growth remained strong in March, at +8.6% y/y and +5.9% y/y in nominal and real terms, respectively. However, the structure has already been heavily marked by the distinct demands of the economy during lockdown.
The trend of rising wages continued in April with nominal wages up 12.1% and real incomes up 9.7%. However, the real disposable incomes remained more or less flat year on year, rising by 0.8% in April, but will almost certainly turn negative in May after inflation jumped.
Russians' real disposable income will fall by 3.8% in 2020, according to the Economics Ministry, returning the fall in incomes to its six-year long trend after a very short period of growth in the last quarter of 2019.
Services have been hurt but not as much as manufacturing where the PMI cratered to an 18-year low of 12.2 in April ​– by far its lowest level since the survey was launched in the noughties. The May manufacturing results are due out in the next few days and are likely to show a similar deep contraction.
Global lockdowns and weak client demand were commonly linked to the decrease in new orders, which fell at the second-steepest rate since December 2008. Subsequently, greater spare capacity led to a substantial reduction in workforce numbers.
Russia’s unemployment numbers jumped in April by almost a quarter
from 4.8% to 5.8%. Russia’s unemployment has been at post Soviet lows for several years and is one of the limited successes of the Putin administration.
At the same time, the drop in employment mirrored increased pessimism among manufacturers​ regarding the outlook for output over the coming year. Business confidence turned negative and slid to a record low amid fears of a slow recovery, says Markit.
That dip in optimism is mirrored in other polls. Trust in Russian President
43​ RUSSIA Country Report​ June 2020 ​ ​www.intellinews.com