The factories are getting quieter // Monitoring leading indicators

Against the background of the global post-pandemic acceleration of inflation, leading indicators of business activity in September show a slowdown in its growth – both in the euro area, and in the United States, and in Russia. Thus, the index of industrial optimism of the IEP named after Gaidar was the last of the leading indicators in the Russian Federation that recorded a slowdown in recovery activity in the Russian industry: its September value fell back to the levels of May-June 2021, while the estimates of almost all components worsened (see graph). “A sharp slowdown in demand growth in September caused a logical adjustment of other market survey indicators derived from the dynamics of actual sales,” says Sergei Tsukhlo, head of the IEP’s business survey laboratory. In particular, for the first time in 2021, satisfaction with demand volumes sharply decreased, the optimism of output plans continued to decline from the post-crisis maximum in June, and the formal improvement in the balance of estimates of finished goods stocks (the number of responses “below the norm” increased again) “testifies to the growing uncertainty of enterprises in victory over the viral crisis and the transition to more or less stable post-crisis growth, ”the IEP notes. The growth of optimism in demand forecasts has also stopped – now only the hiring plans demonstrate “a growing desire of industrial enterprises to continue recruiting personnel, the deficit of which they had at the beginning of the third quarter,” notes Mr. Tsukhlo.

The European PMI, according to preliminary estimates by Markit Economics, fell to a minimum in five months (56.1 points against 59 in August), although it remained in the growth zone (above 50 points). The slowdown in growth affected both the industry (58.7 points after 61.4 in August) and the service sector (56.3 points after 59). In the industry, the main reason is problems with the supply of raw materials and key components, according to ING Bank. This led to the fastest rise in producer costs since 2000 and is already reflected in consumer prices. In general, the forecast remains quite positive, although a slowdown in activity seems inevitable, the bank notes. In the US, the preliminary PMI estimate also shows a slight slowdown in activity growth both in industry (60.5 points after 61.1 in August) and in the services sector (54.4 points after 55.1).

Oleg Sapozhkov, Tatiana Edovina

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