ANDREY KAUKIN: “SO FAR IT WOULD BE HARD TO ESTIMATE THE IMPACTS OF THE PMI DECLINE”

Andrey Kaukin, Acting Director of the Center for Real Sector, Head of the Industrial Organization and Infrastructure Economics Department at the Gaidar Institute, commented on the news about the decline of business activity in processing industries. The expert opinion is cited by Izvestia.

The purchasing manager’s index (PMI) for processing companies fell to 50.7 p.p. in October. According to S&P Global, the index stood at 52 p.p. in September.

According to the study, the current figure is the lowest since July 2022. Andrey Kaukin told Izvestiya how critical this is for the country's economy and for ordinary Russians.

The PMI should be interpreted with caution, as this indicator is based on survey data and reflects, among other things, the subjective assessment of the situation by company management, the expert argues.

“The main challenges for Russian enterprises remained largely unchanged over the last month: difficulties related to the imports of equipment and components, rising costs and higher logistics costs, difficulties in accessing a number of traditional markets, an overall level of uncertainty and a respective decline in investment activity. A new challenge for businesses was the shortage of skilled personnel. Replacing them can be a challenge, which is likely to have an impact on output as well,” Andrey Kaukin believes.

In his opinion, it is still difficult to quantify these effects.