Page 47 - RusRPTFeb19

business activity in four months, according to Markit.
The slowdown in both services and manufacturing brought the composite output index down, a weighted average of the Russia Manufacturing Output Index and the Russia Services Business Activity Index. The composite index posted 53.9 in December, down from 55.0 in November.
All-in-all Market said that the December result was a good one and that the last quarter of 2018 was the strongest in the year for the Russian economy.
“Growth was supported by solid upturns in production and new business. Panellists registered a further reduction in backlogs, partly due to a moderate increase in employment. Meanwhile, inflationary pressures softened. The rate of output charge inflation eased to a nine-month low, with panellists suggesting greater competition was slowing rises in output prices. Reassuringly, business confidence strengthened and was the second highest since May 2013,” Markit said in a press release.
Output across the Russian goods producing sector increased at a solid rate in December, albeit slightly weaker than November. Where a rise was reported, panellists linked this to greater new order volumes. New business continued to expand at a solid pace in December and at the second-fastest rate since January. Anecdotal evidence stated that greater client demand and the acquisition of new customers drove the latest upturn.
“Moreover, new business from abroad increased for the fifth month running and at a rate above the series trend. Some firms suggested that the rise in new export orders was due to greater access to new markets,” Markit said.
On the price front, manufacturing firms registered a softer rise in input prices. The rate of cost inflation was marked overall but dipped to a nine-month low. Nonetheless, panellists attributed the increase in cost burdens to higher raw material prices and greater transportation costs.
"Encouragingly, business confidence picked up further in December. Robust optimism stemmed from greater access to new foreign markets and a sustained rise in new business, which manufacturers expect to see continuing through 2019,” said Siân Jones, Economist at IHS Markit, which compiles the Russia Manufacturing PMI survey.
Services were also driven by new orders from abroad and the sector expanded more robustly than manufacturers.
“In line with a sustained rise in new business, Russian service providers noted a stronger increase in workforce numbers in December. The rate of job creation picked up to an eight month high amid greater business requirements,” Markit said.
Input price inflation eased for the second month running in December. Nevertheless, Russian service providers continued to register a marked rise in cost burdens overall. Where operating expenses rose, panellists attributed this to higher wage and energy costs.
“Finally, business confidence across the Russian service sector improved in December. Expectations of further rises in new business and a sustained increase in output reportedly drove higher positive sentiment. The degree of optimism was the second-strongest since February and robust in the context of
47 RUSSIA Country Report February 2019 www.intellinews.com