MNI Russia Business Sentiment Indicator Rises to 47.3 in December from 46.8 in November
Sentiment at Russian companies improved moderately but remained weak, as firms cut production and reported a worsening in labour market conditions.
The MNI Russia Business Sentiment Indicator increased marginally to 47.3 in December from 46.8 in November, remaining below the 50 level that separates expansion from contraction.
During the December survey period the rouble depreciated to a fresh low against the US dollar, although our survey ended by the time the Russian crisis reached a new level with the rouble plunging even further.
New Orders remained at a record low level and Export Orders remained in contraction for the fifth consecutive month. With demand weakening, Production fell sharply for the second consecutive month to the lowest level in the survey’s history and into contraction.
Western economic sanctions continued to take their toll on our panel of Moscow Exchange-listed companies who reported that their Financial Position was in the worst shape since the survey began. They also continued to report that credit availability had been severely restricted.
Commenting on the latest survey, Philip Uglow, Chief Economist of MNI Indicators said, “Business sentiment remains weak and firms are starting to show increasing distress following the events of the past year. Both production and orders are at record lows and this looks to be finally spilling over to the jobs market.”
“The recovery in the oil price, higher interest rates and intervention by the central bank have all helped to stabilise the currency, but the situation remains extremely fragile. There is now a serious risk that we’ll see a repeat of the 1998 crisis.”
MNI Russia Business Sentiment is a monthly poll of Russian business executives at companies listed on the Moscow Exchange. Companies are a mix of manufacturing, service, construction and agricultural firms.
Respondents are asked their opinion on whether a particular business activity has increased, decreased or remained the same compared with the previous month as well as their expectations for three months ahead, e.g. is Production higher/same/lower compared with a month ago?
Diffusion indicators are then calculated by adding the percentage share of positive responses to half the percentage of those respondents reporting no change. An indicator reading above 50 shows expansion, below 50 indicates contraction and a result of 50 means no change.
Data is collected through computer aided telephone interviews (CATI) and around 200 companies are surveyed each month.
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