According to the latest data from the IHS Markit Russia Business Outlook survey, private sector firms are slightly more optimistic regarding business activity over the coming year.
The net balance of companies expecting an increase in output has seen from +15% in June to +20% in October.
That said, sentiment is still the second lowest for three years despite being higher than the global average (+14%).
Where firms are anticipating a rise in business activity, they are linking this to new product development and investment in new machinery.
Some companies are also more optimistic due to greater opportunities to expand their export markets and plans for broader sales activity, which it is hoped will boost sales over the next year.
Nonetheless, the net balance is below the long-run trend (since late-2009), with some firms expressing caution.
Threats to expansion during the next 12 months include greater administrative requirements and increased bureaucracy, higher operational and input costs, and more intense competition.
Companies also report concerns about client demand and global economic conditions.
Manufacturers and service providers alike are more confident of a rise in output over the next 12 months, with goods producers noting the more robust improvement in expectations.
The net balance of service providers predicting an increase in business activity, however, is the second-weakest for three years.
Hiring expectations have improved from June’s recent low, with the net balance of firms forecasting a rise in employment at +17% in October, the highest for a year.
Although firms express concerns surrounding a shortage of skilled workers, both manufacturers and service providers are more optimistic of an increase in workforce numbers over the next year.
Private sector companies are also predicting growth in investment over the coming 12 months.
The net balance of firms that foresee an increase in capital spending (+22%) is the highest for seven-and-a-half years, with a greater proportion of both manufacturing and service sector firms anticipating an upturn in capex.
Private sector firms in Russia foresee both staff and non-staff costs increasing over the next 12 months, with the proportions of companies forecasting a rise up since June.
The net balance of firms that expect an increase in non-staff prices has picked up to the highest for a year amid concerns surrounding exchange rate weakness.
Russian private sector companies have revised up their expectations towards selling prices over the coming year, with the net balance rising to +37% in October from +33% in June.
That said, this is exclusively driven by service providers, with manufacturers less optimistic towards increases in charges. ■