Industrial sector keeps “rolling with the punches”
The initial data on December 2014 showed no drastic changes in the feelings of enterprises compared to what they felt in November same year.
The Industrial Optimism Index remained almost at the same level after a deep dive in November. The same picture – without sharp changes – was seen in the dynamics of the Forecast Index. The industrial sector keeps "rolling with the punches" (including the informational punch from our government economic agencies), assessing the current volumes of demand and output as not so pessimistic.
None of the other components of the Industrial Optimism Index saw drastic changes in December. The demand changed in the same manner as it did in November and is unlikely to see any alterations until the month end. This is what kept satisfying the demand at the November level, not so high though as it was in the period between August and October.
"Normal" answers still dominated in Russia's industrial sector when enterprises were asked to assess sales volumes. However, the domestic industrial sector is also ready for a possible negative scenario as well, as evident by the assessment of stocks of finished goods which enterprises retained at minimum redundancy levels. The latter allows manufactures to store, without any misgivings, manufactured good surpluses there. This is what probably will improve the official output dynamics of December. At least the survey data are indicative of such a scenario.
The December forecasts for Russia's industrial output argued for this scenario. The forecasts were lower indeed, but not worse than those of the previous years, and not the way they should worsen in the run up to a crisis.
Demand forecasts were lower too. Demand forecasts have steadily becoming more pessimistic since October, however they still remain "positive", not high though, through deseasoning.
On the contrary, employment forecasts were atypically positive during H2 2014 compared with the previous years, which is most likely attributed to increased competitive power of industrial enterprises in the labor market due to slower growth in wages in other sectors of economy.
Sergey Tsukhlo, Ph.D. in Economics, Head of Business Surveys Laboratory