How Russia’s Service Activity Looked in December 2017

According to a report by Markit Economics, Russia’s service PMI (purchasing managers’ index) showed a weaker improvement in December as compared to November 2017. It stood at 56.8 in December as compared to 57.4 in November. The PMI figure beat the market expectation of 56.5.

The improvement in Russia’s service PMI in December was mainly due to the following factors:

• Production output and volume rose at a higher rate in December 2017.
• New orders improved at a softer pace in that month.
• Overseas demand (ACWI) (VT) also improved at a marginally higher rate in December as compared to November 2017.
• Employment in the service sector has also risen at a faster rate since May 2013.

In the previous part of this series, we discussed that energy products and crude oil (USO) (UCO) are important components of the Russian economy. However, the growing demand for various services in the economy is also boosting the overall performance of the service sector.

The iShares MSCI Russia Capped ETF (ERUS), which tracks the performance of Russia’s economy (RSX), improved 1.9% in December 2017. However, the VanEck Vectors Russia Small-Cap ETF (RSXJ) rose 3.5% in the same month. In the next part of this series, we’ll analyze China’s economic growth in 4Q17.