4 Oct 2017 13:33

Russia Services PMI sees biggest gain in three months, to 55.2 in Sept - IHS Markit

MOSCOW. Oct 4 (Interfax) - The Russia Services PMI rose to 55.2 points in September from 54.2 in August, making its biggest gain in three months, IHS Markit survey data show.

The Russia Composite Output Index, which tracks activity in both the services and manufacturing sectors, rose to 54.8 in September from 54.2 in August.

Index readings above 50.0 points indicate growth in business activity, while those of less than 50.0 show a decline.

"September survey data signalled a further improvement in business activity in the Russian service sector. Output levels rose at a strong rate and were supported by a steep upturn in new orders. Moreover, the expansion in new business was the quickest since December 2012. Furthermore, the rate of job creation accelerated to the fastest in over four years. On the price front, both input price and output charge inflation accelerated. However, the rates of inflation were both subdued in the context of the series history. Meanwhile, business confidence rose sharply and reached an eight-month high, driven by robust client demand," IHS Markit said.

The IHS Markit Russia Services Business Activity Index - a single-figure measure designed to track changes in total Russian services activity - posted 55.2 in September, up from 54.2 in August. "This indicated a strong increase in total business activity across the Russian service sector. The upturn was the quickest in three months and signaled a solid end to the third quarter," IHS Markit said.

The IHS Markit Russia Composite Output Index (covering both manufacturing and services) posted 54.8 in September, up marginally from August. "A strong upturn in business activity in the service sector more than offset a slightly softer increase in manufacturing production," IHS Markit said.

"In line with the regained growth momentum seen in business activity, new orders received by Russian service providers rose steeply in September. Notably, the pace of expansion was the fastest in nearly five years. A number of panel members linked the increase in new business to solid demand from both domestic and foreign clients. Meanwhile, new orders at Russian manufacturing firms rose at a solid pace that was in line with that seen in August," it said.

"The growth rate of employment in the Russian service sector strengthened in September, extending the current sequence of job creation to nine successive months. Moreover, the increase in staffing levels was solid and the fastest since May 2013. Conversely, backlogs contracted for the first time since May. That said, the rate of decline was fractional. Recruitment helped firms to complete existing business. Matching their service sector counterparts, manufacturers reported a contraction in the level of business outstanding. Goods producers did, however, report the first increase in staffing levels since February. Employment growth was largely driven by increased new orders."

"Input prices paid by Russian service providers continued to increase in September, and at a pace slightly faster than that seen in August. Anecdotal evidence largely attributed inflation to higher raw material and labour prices. Although cost burdens rose at a strong rate, the pace was muted in the context of the series history. Similarly, average charges increased at a solid pace. Panellists linked higher output prices to the sustained rise in cost burdens. Despite reaching a four-month high, charge inflation was below the long-run series average. Meanwhile, inflationary pressures intensified in the manufacturing sector, with the rates of input price and output charge inflation both accelerating to ten- and nine-month highs respectively."

"Business confidence in the Russian service sector was robust in September. Output expectations for the next 12 months improved sharply to an eight-month high. A number of surveyed firms linked positive sentiment to strong domestic and foreign client demand, and improved market conditions. Similarly, firms in the manufacturing sector signaled stronger levels of confidence, and expectations were the most robust since May 2015," IHS Markit said.