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Why Russia’s Service Activity Weakened in March

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Russia’s service purchasing managers’ index

According to Markit Economics, Russia’s service PMI (purchasing managers’ index) fell in March, to 53.5 from 56.5 in February. The PMI figure missed the market expectation of 55. It marked the weakest expansion in manufacturing activity since July 2017.

Russia’s March service PMI was mainly driven by the following:

  • Production output and volumes rose at a weaker rate.
  • New and export orders in the service sector improved less.
  • Employment in the service sector weakened.

Rising political instability affected manufacturing and service activity in Russia. If the political environment improves, we could expect its economic activity to improve.

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Performance of ETFs in March

The iShares MSCI Russia Capped ETF (ERUS), which tracks Russia’s economy (RSX), fell 2.5% in March. However, the VanEck Vectors Russia Small-Cap ETF (RSXJ) rose 0.88%. In the next part of this series, we’ll analyze Brazil’s manufacturing PMI in March.

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