MNI Russia Business Sentiment Indicator: Russian Business Sentiment Up Slightly In February - Confidence Still Weak As Production Hits Lowest On Record

Russian business sentiment increased slightly in February but remained at a low level, as companies continued to face the negative impact of the weak currency.
 
The MNI Russia Business Sentiment Indicator increased to 43.0 in February from 41.3 in January. Companies were, though, increasingly negative about the next three months with the Expectations Indicator falling to a record low of 32.5 from 33.0 previously.
 
The continued weakness in the survey follows a period of further weakness in oil prices and a new record low in the rouble against the US dollar. While there has been some recovery in both in recent weeks, the volatility was clearly in the minds of panellists at the time of the survey.
 
Firms complained that the weakness in the rouble was hurting business, with the Effect of the Rouble Exchange Rate Indicator declining to a record low of 31.6 in February from 34.0 in January.
 
While headline sentiment increased a little, Production fell very sharply to 40.8 in February from 50.5 previously. This was the lowest since the survey began in March 2013 and marks a major setback following nearly a year of relative stability.
 
New Orders also slipped back further into contraction to 46.5 from 49.0 previously. Export Orders, which have remained just above the 50 neutral mark for the previous 10 months, fell to 49.7 in February from 50.3 in January.
 
Both price measures were broadly stable. Input Prices rose slightly to 51.8 from 50.8 in January, while Prices Received held steady at 53.5.
 
Commenting on the latest survey, Philip Uglow, Chief Economist of MNI Indicators said, “The small rise in the MNI Russia Business Sentiment Indicator masks weakness in other key parts of the survey. Production collapsed in February while orders also declined.”
 
“There is scant evidence that companies are benefiting from the rouble weakness. In contrast, most are facing higher production costs and also increased cost of borrowing both domestically and overseas.”