Russian private sector output stabilizes in June - HSBC
MOSCOW. July 3 (Interfax) - Russian private sector output stabilized in June, having previously declined four times in the first five months of 2014, HSBC said in a research note.
HSBC said that in the service sector, output fell only marginally and new business stabilized, according to PMI survey data from HSBC and Markit. That said, the 12-month outlook for services activity remained weak, and firms shed staff as the volume of outstanding business continued to fall. The latest results also signalled the weakest input price inflation for service providers since October 2010, and a slower rise in prices charged for services.
The seasonally adjusted HSBC Russia Services Business Activity Index remained below the no-change mark of 50.0 for the fourth month running in June, indicating a decline in private service sector output. That said, the Index improved from May's five-year low of 46.1, to 49.8, indicating only a marginal rate of contraction. A slight rise in manufacturing output during the month took the Composite Output Index to 50.1, up from a five-year low of 47.1 in May.
The volume of incoming new business in the Russian service sector was broadly stable in June. That followed the steepest declines seen for nearly five years during the prior two months. Underlying demand remained weak, however, as signaled by a further drop in the volume of incomplete work held at service providers. In contrast, manufacturing new orders fell in June, having risen slightly the previous month.
Although services new business stopped contracting in June, the 12-month outlook for activity in the sector remained weak. The strength of sentiment was little-changed from May, to remain among the lowest registered since the survey started in October 2001.
Reflecting the subdued outlook, service providers continued to shed staff in June. Employment in the sector has fallen ten times in the past 12 months. The rate of decline remained solid, despite easing since May, and was accompanied by a further round of job shedding at manufacturers.
Inflationary pressures subsided in June. Average input prices in the service sector rose at the slowest rate since October 2010, with the pace of inflation easing further from March's 34-month peak. Rising costs, reported at only 11% of firms, were linked to higher prices for energy, fuel, food and utilities. Service providers continued to raise their own charges during the month, but the rate of inflation weakened for the first time since January, having hit a 25-month peak in May. In manufacturing, input price inflation slowed to a four-month low, as did inflation of output prices, HSBC said.