PMI index of the service industry of Russia

2020: Record fall of the index in April

Purchasing Managers' Index (PMI)  in Russia according to the results of April, 2020 was 12.2 points against 37.1 a month earlier. So strong recession never was, data of the analytical agency IHS Markit demonstrate.

Experts connected this anti-record with a pandemic of a coronavirus of COVID-19 and the taken measures of fight against it. In particular, decrease was caused both temporary closure of business, and considerable falling of client demand, buyers abstained from expenses and postponed order placement.

Purchasing Managers' Index in the field of services set an anti-record

Self-isolation and other emergency measures created operational problems for service providers, the economist of IHS Markit company Shian Jones explains. At the same time the consumer demand fell unprecedented rates against the background of global closing of business.

Sudden shock became obviously obvious to a business environment in April when inflow of new orders ran low  and the companies reduced employment historically record rates — Shian Jones says. — The pessimism felt in all manufacturing sector concerning increase in production in the coming year was reflected also by their colleagues from the service industry.

Sharply also volumes of new orders fell in April, at the same time recession was maximum in a historical context. Demand from foreign clients also considerably decreased. New export orders were reduced most in high gear since the beginning of collection of data on this indicator (since September, 2014) against the background of escalation of flash of COVID-19 across the whole Europe.

In March the PMI index in Russia in the field of services made 37.1 points, and in the field of production — about 39.5 points. Such falling says about the maximum pessimism in the main spheres of economy that it is connected with influence of epidemic of a coronavirus and restrictions which are introduced because of spread of a disease.^[1]

2012

Index of July, 2012

According to data of the PMI Index calculated by Markit company for HSBC, cumulative growth in the private sector of Russia remained insignificant at the beginning of the third quarter. Growth rates of business activity in the field of services fell to minimum since September, 2010, having neutralized gain of increase in production in the processing industries.

The PMI index of the service industry of Russia of HSBC Bank in July, 2012 remained above a critical mark of 50.0 points, however, fell about 53.2 points in June up to 52.0 points, having indicated the minimum growth rates in 22 months. The cumulative Production index remained at the level of a June indicator – minimum in eight months – 52.6 points, despite acceleration of rates of production volumes in the processing industries (53.6 points).

The new orders which came to the companies of the Russian service industry grew in July only slightly, growth rates became minimum in 23 months. Gain of growth of new orders in the processing industries could not prevent reduction of cumulative growth rates in both sectors to decimestrial minimum.

Against the background of weak growth of new orders volumes of incomplete orders in the field of services continued to fall. Rates of reduction slowed down after significant growth in June, but remained above the long-term average level of a research. The similar trend was noted also in the processing industries.

Expectations concerning growth of business activity in the next 12 months sharply decreased at the beginning of the third quarter. A little more than a third of the companies predict increase in business activity within the next 12 months, and 13% - its reduction. In general optimism degree sharply fell since June to the minimum indicator for all expired period of 2012 and the second minimum in three and a half years.

In July the companies of the Russian service industry continued set of employees. Rates of creation of jobs accelerated after insignificant rates of June and in general corresponded to the average level for the entire period of 2012. In the processing industries employment, on the contrary, remained at the level of the last month.

The overall level of inflation of purchase prices in the processing industries and the service industry raised to a six-months maximum in July, but remained weaker than the level of a long-term trend of a research. Participants of a research connected growth of costs with gain of price pressure upon energy carriers, fuel, utilities and labor costs. Costs in the field of services exceeded costs in the processing industries.

Growth rates of selling prices both in the field of services, and in the processing industries in July accelerated. Following a trend of purchase prices, growth of inflation of selling prices in the field of services exceeded growth in the processing industries. Nevertheless, cumulative inflation of selling prices in both industries remains rather weak.

Commenting on results of a research of the service industry of Russia and data on the Russian cumulative HSBC Russia Composite PMI, Alexander Morozov, the chief economist of HSBC Bank across Russia and the CIS countries, notes: 'According to data of the July Cumulative PMI Index of Russia of HSBC bank, the Russian economy saved the lowered growth rates. The processing industries managed to stabilize increase in production, though at a low level. Unlike them, growth in the field of services continued to slow down against the background of very weak inflow of new orders. It is important to note that the trend of deceleration of growth in the field of services began with the second half of the year 2011 and proceeds still. As well as the processing industries, the Russian service industry broke up to two groups: one extends, another is reduced. Existence of these two groups indicates increase uncertainty concerning a trajectory of economic growth in the future.

We consider that, at the moment the Russian economy grows with a speed of 2.7% in terms of a year. However, by our estimates, for the Russian GDP there is a risk of further loss of growth rates in the coming months before it is able to be stabilized at the level of 2.0-2.5%.

Though in July inflation pressure amplified both in the processing industries, and in the field of services, we believe that it does not cause concerns. Deceleration of demand growth should allow producers to transfer to clients only a part of inflation pressure. Thus, the key risk for inflation is connected with increase of shock of the offer of food products, but not with demand. This type of inflation can hardly be bridled traditional monetary policy.'

As the index is calculated

The PMI index of the service industry of Russia is based on the analysis of results of monthly polls of group of the private companies working in the Russian service sector. The group which structure objectively reflects structure of a service sector in general includes for August, 2012 more than 300 companies.

Answers to questions reflect the changes taking place in comparison with the last month and are based on indicators on the middle of month.

The report joins the following data on each indicator:

• percentage between groups of answers,
• difference between the number of positive and negative answers and also
• the 'diffusion' index which is output as the amount of affirmative answers and a half of answers of group 'without changes'.

Diffusion indexes have all characteristics of key indicators and are convenient for use as total values, showing the prevailing direction of change.

The index indicator indicates over 50.0 points growth of such variable, and it is lower than 50.0 points – on decrease.

Notes