the business confidence index in September 2024 increased in the mining sector to 6.2%, in the manufacturing sector it decreased to 6.8%
Business activity in September 2024, judging by the Rosstat report published on Wednesday, consolidated near the maximums in a state of equilibrium between the factors that strengthen and weaken it. The first in the manufacturing industry included high demand estimates; in the extractive sectors, the index was supported by expectations of rising product prices. Their influence was balanced by growing assessments of the uncertainty of the economic situation (probably associated with the prospects for increasing the key rate and external restrictions), and in processing - high capacity utilization and a decrease in the growth rate of profits and prices in the moment and in the future.
The entrepreneurial confidence index is an indicator of the business activity of organizations; according to Rosstat, in September 2024 compared to August, it increased in mining to 6.2% (plus 0.5 percentage points; p.p.), in the manufacturing sector it decreased to 6 .8% (minus 0.1 p.p.). In long-term dynamics (taking into account significant fluctuations in production), the indicators demonstrate the fixation of business activity at high levels with a decrease in fluctuations due to counter movements in incoming estimates. Thus, in mining, the growth of the index was influenced by an increase in the share of respondents who positively assessed demand and prospects for production in the coming quarter (from minus 5.8% to minus 4.4% and from 22.2% to 22.7%, respectively) . In processing, a slight decrease was due to a decrease in estimates of current demand for products (by 0.8 p.p., to minus 12.9%) and an increase in estimates of the accumulation of inventories of finished products (by 0.9 p.p., to 0.3% ) - they were leveled out by an increase in the share of respondents expecting output growth in the coming quarter (by 1.4 percentage points, to 33.6%).
The most striking stories in the September publication of Rosstat are price expectations, estimates of production restrictions in mining (increased by 8 percentage points, to 99.9%) and the growing influence of the uncertainty of the economic situation - probably related to expectations of a possible further rate increase by the Bank of Russia and difficulties foreign trade. Thus, the share of managers of organizations who assessed the current economic situation at the enterprise as favorable continues to decrease (from 3.5% to 2.9% in mining and from 10.8% to 10.7% in processing). The share of those expecting positive results in the next six months also decreased (from 14% to 11.2% in mining and from 26.2% to 25.8% in processing).
Alternative assessments of the state of the industry, presented by Sergei Tsukhlo from the Institute of Economic Forecasting of the Russian Academy of Sciences, are somewhat at odds with Rosstat due to differences in the sample: in the context of a “reduction in demand,” dissatisfaction with sales volumes is growing and pessimism in demand forecasts remains. In such a situation, the industry stopped increasing production volumes and minimized inventories of finished products, while keeping production plans in the black.”
He also notes that enterprises are reporting a decrease in the number of employees for the second month in a row, although plans assumed an increase in employment, and states that there is a systemic problem of the lack of necessary labor in the market and the impossibility of solving it by increasing wages. “For the overwhelming majority of manufacturers (67%), the main problem is the banal absence of potential applicants for worker vacancies in the vicinity of the enterprise. In October 2023, 73% of such responses were received,” notes Mr. Tsukhlo, explaining the decrease in the share “by the cooling of the economy and the loss of some of the optimism in the plans and forecasts of enterprises.”
Group of authors of the IEP named after. Gaidara, in the latest “Monitoring of the economic situation in Russia”, based on model calculations taking into account the cyclical component of growth, carefully states that “in June 2024, the cyclical component began to decline - to 2%, which can be interpreted as the first signs of the beginning of a cooling of the economy, but the gap output remains positive. This may indicate both the impact of the tight monetary policy pursued by the Bank of Russia and the fact that the economy is naturally returning to its trend trajectory, the growth rate of which is lower than the current observed values.”
