Russia’s service sector on the rise
November's HSBC Services PMI was the highest in 3 months, with its headline Services Business Activity Index reaching 54.8 points in November, up from 53.3 in October. Output was also growing at a faster pace, as manufacturing production rose at it's strongest rate since April to 54.1 points.
A reading above 50 points suggests expansion, while readings below 50 imply contraction.
A continuing growth of new business gave most of the impetus to the sector in November. It started to gradually recover after a sharp fall in the hot summer of 2010 and reached its highest growth rate since July 2011.
The statistics for Russian services comes after a positive HSBC PMI Manufacturing release on December 1, where the bank was also talking about a recovery in Russian manufacturing. “Both manufacturing and services have substantially improved their performance, indicating that GDP will return to its average growth rate for the past 12 months of about 0.35 per cent per month,” said Alexander Morozov, Chief Economist (Russia and CIS) at HSBC.
“The slowdown in Russian economic growth signalled by the PMIs in 3Q seems to have been reversed in November,”.Morozov added.
Such a positive momentum isn’t likely to be firm and long – term. “With the looming recession in the Eurozone and slower economic growth elsewhere in the world, the high dependence of Russia’s economic growth on robust export demand growth and high commodity prices poses significant risks of another round of GDP growth slowdown,” Morozov explained.