MNI Russia Business Sentiment Indicator: Russian Business Sentiment Climbs To Breakeven Point - Firms Remain Cautious Despite Increases In Production And Output

Russian business sentiment picked up markedly in March, with increased optimism helping to push many other areas of the survey closer to the neutral mark and in some cases into expansionary territory.
 
The MNI Russia Business Sentiment Indicator rose to 50.0 in March from 43.0 in February. Companies were also less pessimistic about the next three months with the Future Expectations Indicator rising to 40.9 from last month’s record low of 32.5.
 
Following the hint of a recovery displayed towards the end of last month, momentum followed through into March as the rouble appreciated further against the dollar and oil prices surpassed $40 per barrel for the first time since December.
 
There was renewed confidence in the rouble, which saw the Effect of the Rouble Exchange Rate Indicator leap to just below the neutral level of 50, increasing 55.1% to 49.0 from February’s series low of 31.6. Improvements in firms’ expectations for the rouble exchange rate over the next three months were less pronounced but again positive, recording a monthly increase of 8.6%.

In hand with overall business sentiment, both Production and New Orders picked up in March, with the latter sitting only marginally below the 50 breakeven level. In spite of the pick up, firms drew down their stock levels with the Inventories Indicator contracting to 49.3 in March from 52.7 in the previous month. A figure below 50 indicates that a greater proportion of firms surveyed planned to reduce stock levels.
 
Companies said that their current Financial Position had improved during March, with the indicator surpassing 50 for the first time since October 2015, rising to 50.5 from last month’s 49.5. Firms also reported a greater availability of credit, with the respective indicator increasing from 42.2 in February to 50.0 in March.
 
Commenting on the latest survey, Philip Uglow, Chief Economist of MNI Indicators said, “The MNI Russia Business Sentiment Indicator increased for the second consecutive month in March pushing it back just above the average of the past year.”
 
“Alongside an improvement in both orders and output, the picture is certainly less gloomy than the past two months. The continued increase in the oil price should help in the future, although for now most elements of the survey remain at depressed levels.”