Russian business activity growth in December ends year at 49-month high on strengthening new business

The growth of business activity in Russia ended the year on a strong footing, jumping to 49-month high during December, following continuous strength in the country’s new business sector, coupled with firms’ optimism over the future growth prospects.

After adjusting the seasonal variance, the Markit Russia Services Business Activity Index rose to a 49-month high of 56.5 in December, up from November’s 54.7. In fact, the three-month average to December was the sharpest since Q1 2013. Russian service providers cited stronger underlying demand as the key factor driving growth during December.

Further, the Russia Composite Output Index rose to 56.6. Up from 55.8 in November, the latest figure capped off the strongest quarter of growth for four years. New orders increased at the most substantial rate at Hotels & Restaurants. Moreover, new order growth remained marked in Russia’s goods producing sector.

Faced with a higher volume of new projects, outstanding business continued to accumulate at both Russian service sector and manufacturing companies at the end of 2016. That said, the rate of increase at service providers eased to a five-month low and was only modest overall.

Conversely, Russian manufacturers ended a month trend of job shedding in December by raising their employment at the quickest pace for over five-and-a-half years. Meanwhile, Russian service providers remained optimistic towards future business activity. However, the level of positive sentiment weakened to a three-month low.

"Supported by a faster increase in new business orders, service providers registered a marked rise in output and at a rate that continued to outstrip its historical average," said Samuel Agass, Economist, IHS Markit.