Russian business optimism weakest since October 2016
Staff Writer |
The latest IHS Markit Russia Business Outlook indicates a weaker level of optimism among private sector firms in February.
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Moreover, positive sentiment is the lowest since October 2016 and subdued in the overall context of the series history, with the net balance of firms expecting a rise in business activity dipping from +29% in October to +23% (and below the historical average of +32%).
Where firms foresee growth, however, they generally attribute this to greater access to new markets and the acquisition of new clients.
Despite hopes of increases in client demand, forecasts for new business are less positive in February.
At the sector level, service providers have signalled a slight rise in optimism towards the year ahead, whereas manufacturers have expressed more reservations towards growth prospects compared to October.
One such concern regards greater competitive pressures among goods producers.
Private sector firms remain relatively upbeat in regard to future job creation, recording the second-highest net balance (+17%) in five years.
Panellists commonly note that opportunities stemming from access to new markets are a source of optimism for employment growth.
Notably, forecasts for inflationary pressures remain relatively muted in the context of the series history.
Demand conditions look set to dictate private sector companies’ pricing power, with the forecast for output charge inflation at its joint-weakest since comparable data first became available October 2009.
The latest survey data signals significant employment growth expectations among Russian private sector firms as the economy continues to recover from the recent recession.
Moreover, optimism towards hiring is the second-strongest since February 2013, just behind last October’s peak.
However, companies are less upbeat about opportunities for investment in the next 12 months.
At the sector level, manufacturers report a lower degree of optimism towards job creation over the next 12 months compared to the previous survey period.
In contrast, service providers signal a slightly higher level of confidence, the strongest seen in five years.
Price pressure predictions among Russian private sector firms remain subdued relative to the series trend in February.
Although input costs are expected to rise, the net balance (+32%) is one of the lowest in the series history, with manufacturing firms revising down their forecasts for cost inflation over the coming year. ■