Russia PMI at 49-Month High

Activity in Russia’s services sector surged in December to its highest level in more than four years, the Markit purchasing managers index showed on Friday.

The headline PMI rose to 56.5 in December from 54.7 in November, remaining about the 50 mark that separates expansion from contraction for the 11th month in a row, Reuters reported.

The average reading of the PMI index over the last quarter of 2016 was the highest since the first quarter of 2013.

“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, an economist at Markit.

The survey showed employment in services was close to stabilization as companies remained optimistic about their future prospects.

The business expectations index remained above the 50 mark, although it declined to 58.6 in December from 60.1 in November. Better activity in the services sector supports Moscow’s official stance that the worst of Russia’s economic slump is over and that the economy will return to growth in the foreseeable future.

Earlier this week, a separate PMI survey showed Russian manufacturing also expanded in December.

Meanwhile, the Russian economy may show slight but steady growth in early 2017, and such scenario may attract foreign investors to participate in various projects in the country, former  finance minister Alexei Kudrin said Thursday, Sputnik reported.

“The Russian economy is currently moving out of negative growth rates. We will most likely have minimal, but positive growth rates in the beginning of the next year… Foreign investors are traditionally intensifying their attention to Russia during such turning points,” Kudrin told Rossiya-24 television.

It will be speculative investment, Kudrin noted, since, as long as Russia has unstable oil prices, foreign investors will not take a sustainable and long-term interest in the Russian market.

The Russian economy suffered a setback in 2014, as the ruble lost about half of its value against the US dollar amid low global oil prices and western economic sanctions imposed against Russia over the Ukrainian crisis. Earlier this week, the Russian Economic Development Ministry improved the 2016 GDP decline forecast from 0.6% to 0.5% in the wake of improvement of oil prices expectations.