Composite PMI index of Russia S&P Global weakened to 54.4 points in May from 55.1 points in April

Composite PMI index of Russia S&P Global (“proxy” of GDP, includes industry and services) weakened to 54.4 points in May (values ​​above 50 mean growth in business activity) from 55.1 points in April. Recall that in February the indicator made a breakthrough to 53.1 points from 49.7 points in January, reached 56.8 points in March and began to roll back. As in April (see Kommersant of May 15), the reason for the slowdown in the composite PMI in May was a cooling in services.

At the same time, according to Rosstat, output in basic economic activities (mining, processing, energy, housing and communal services, agro-industrial complex, construction, transport, trade and finance) in April increased by 5.5% in annual terms after an increase of 1. 1% in March for the first time since March 2022. The reasons are the low base of last year and the acceleration of the dynamics of industrial production and retail trade. “The release of basic sectors is a good proxy for GDP,” analysts of the Solid Numbers Telegram channel believe. Judging by the dynamics of the composite PMI in relation to the dynamics of annual GDP (see chart) and the slowdown in monthly growth of the indicator (the Ministry of Economy believes that in April versus March, seasonally adjusted, it increased by 0.2% after rising by 1.1% a month earlier ), the chances of an early cooling of growth are high. “It would be nice to have an independent indicator that historically beats GDP better, but I’m not sure that there is one other than PMI,” Alexander Isakov from Bloomberg Economics notes in turn.

In annual terms, GDP in April really rose above the level of last year by 3.3% against a decline of 0.7% in March 2023 against the backdrop of a low base. At the same time, in January-April 2023, the decline in GDP, according to the Ministry of Economy, slowed down to 0.6% (the target annual forecast of the department is economic growth of 1.2%). Analysts surveyed by the Bank of Russia also improved their consensus forecast for GDP growth for 2023 to 0.8% in June from minus 0.1% a month earlier, and the regulator itself revised its GDP forecast up to plus 0.5– 2.5%.

The current consensus forecasts for 2024–2025 roughly coincide with the April ones, fixed by the Central Bank: according to them, GDP in 2024 will be 0.1% higher than the level of 2021, and in 2025 by 2021 growth will be 1.6% ( in the April survey – 0.8%). The estimate of long-term GDP growth rates remains unchanged at 1.5%, which corresponds to the potential of the Russian economy.

Artem Chugunov