Deutsche Boerse group poll suggests production in Russia at “lowest level on record”

By Andrei Skvarsky.

A monthly survey by Deutsche Boerse group’s intelligence firm MNI Indicators suggests that Russian companies were a wee bit more optimistic in December than the month before but that production was at “the lowest level on record”, which appeared “to be finally spilling over to the jobs market”.

The ruble plunged to a fresh low against the US dollar in December. New orders “remained at a record low level”, and export orders “remained in contraction for the fifth consecutive month”, MNI Indicators said in a statement in reporting the survey, which underlay December’s issue of the MNI Russia Business Sentiment Indicator.

Production fell sharply for the second consecutive month to the lowest level since the firm launched its surveys.

Western economic sanctions continued to take their toll on Russian companies. The majority of the about 200 companies covered by the poll said their finances were in the worst shape since the surveys began. As before, they said credit availability had been severely restricted for them.

“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,” said MNI Indicators chief economist Philip Uglow.

“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.”

Surveys on which the MNI Russia Business Sentiment indicators are based are polls of executives at about 200 Russian companies listed on Moscow Exchange. They are a mix of manufacturing, service, construction and agricultural firms.

Respondents are asked for their opinion on whether a particular business activity has increased, decreased or remained the same compared with the previous month – for instance whether production has been higher, the same or lower than it was a month ago, – as well as for their expectations for three months ahead.

Diffusion indicators are then calculated by adding the percentage share of positive responses to half the percentage of the respondents reporting no change. An indicator reading above 50 shows expansion, one below 50 represents contraction and one of 50 means no change.

December’s indicator was 47.3 compared with November’s 46.8.

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