Industrial optimism index fell in February

Independent economist Sergei Tsukhlo presented new estimates of the industrial optimism index (he previously conducted this research for many years while working at the Gaidar Institute). We are talking about February changes in the sentiment of enterprises towards January and their forecasts for March-April. After reaching a local maximum in the fourth quarter of 2023 (since February 2022), the index value in February decreased for the second month in a row – from plus 21 points to plus 14 points (as of February 18).

In particular, February recorded the most significant slowdown in demand growth since July 2023. The balance of actual sales changes has lost five points and is a modest plus two points versus plus seven in January. The share of respondents reporting “normal” sales was 64% versus 73% in November 2023 (then there was a local maximum). The share of ratings “below normal” increased to 30%.

The indicator reflecting plans for industrial output fell by two points in February after a noticeable decline of seven points in January. As a result, its value became a 14-month minimum. Formally, the balance of estimates of product inventories, having decreased from plus two to minus one point, made a positive contribution to the dynamics of the overall index, since excess inventories gave way to their shortage – which should stimulate growth in output to replenish warehouses. “This was the third (and, it seems, again unsuccessful) attempt by the industry to move to the formation of a manageable excess of finished product inventories since the Covid crisis of 2020,” notes Sergei Tsukhlo, explaining this by uncertainty in the markets.

Note that the value of the industrial optimism index does not agree with the results of market surveys of the Central Bank, which recorded a decrease in company optimism in December 2023 and an improvement in January 2024. Rosstat also recorded an improvement in the mood of industrialists in January. The dichotomy of leading indicators in industry is not new, but the industrial optimism index is traditionally the most operative and may indicate that the peak of business activity in the sector has indeed passed.

Artem Chugunov