Optimism decreased in the expectations of companies – Kommersant

The business climate indicator (BCI) of the Bank of Russia (reflects actual and expected changes in production and demand in the main sectors of the economy) fell to 7.9 points in May after a decade-long high in April of 9.4 points. At the same time, the index still remained above the level of March.

The index of the current state of the business climate (defined as the change in demand and output over the month) fell from 3.4 points in April to 2.3 points in May, while the short-term expectations index (fixes changes in demand and output in the coming quarter) fell from 15.6 up to 13.6 points (see chart).

The dynamics of assessments of the current business conditions in the sectoral context is heterogeneous. Compared to April, the value of the indices decreased in the service sector, industrial production and agriculture. Current production estimates continued to rise and were close to highs in sectors such as construction, transportation and storage. The most noticeable decline in demand was recorded in mining, wholesale trade, as well as in the provision of electricity, gas and steam. Demand grew in construction, as well as in the field of transportation and storage. Its contraction has slowed slightly in retail and agriculture.

Companies’ expectations are less positive than a month earlier (this is their first deterioration this year). Optimism declined most noticeably in trade and services. At the same time, the improvement in expectations was noted in the processing, and the greatest positive was retained by the producers of investment goods. The deterioration of the dynamics of the indicator was observed in most industries – with the exception of construction and transport. The situation in the extractive industries remains weak and deteriorating. Production expectations are consistently high in consumer and investment goods manufacturing. The decrease in optimism about future demand is most noticeable in production due to the export embargo and the effect of the price ceiling on supplies, and in wholesale and retail trade due to moderate consumer activity, the Central Bank notes.

Against this background, the costs of enterprises in May, as in April, in the economy as a whole increased (primarily in construction and trade), and price expectations decreased after rising in the previous two months (see Kommersant of May 25).

Artem Chugunov