Sergei Tsukhlo, Candidate of Economic Sciences, Head of the Business Surveys Department of the Gaidar Institute told EADaily about the worsening momentum of the euro area manufacturing. In November, the pan-European Industrial Confidence Indicator kept falling further. Sergei Tsukhlo explained how this correlated with the situation in the Russian industry.

Business surveys held in accordance with the European harmonization methods since 1992 provide a unique opportunity to compare the outputs of Russian business surveys with those held in European countries, the expert notes. Over eight months from July 2021 till February 2022, the index stayed at the record and surprisingly stable level. Then, during nine months of the special military operation this index fell, while optimism of Russian manufacturers increased in November.

In November, inflation expectations of the euro area manufacturing decreased by 4 points (to +40.5), but still remained too high and shocking both to enterprises and regulators. In 2022, the euro area record is equal to +59 points. The Russian record of the industry’s inflation expectations in 2022 is much lower than the European one and amounted to +49.7 points in April. From the experience of the 1990s it is known that this value is not shocking either to Russian enterprises or Russian monetary authorities.

If in November the Russian industry succeeded in retaining near-zero growth in output volumes on the previous month, the euro area manufacturing reported the worsening of its momentum. Despite a probable onset of recession, the euro area manufacturing retains hopes for output growth: in November the balance of manufacturing plans remained positive and even increased for a second consecutive year after the local minimum in September.

The Russian manufacturing has retained a positive balance of output since April 2022. The only exception was in July when the index fell to -5 points. In November, the index was equal to +6 points.

The highest inflation expectations were registered in the Hungarian industry (+55.9 points), while the lowest ones, in the Spanish one (+20.2 points). Other European countries’ inflation expectations are within this band and surpass largely the Russian manufacturing’s inflation expectations which were equal, by European standards, to moderate +9.6 points in November.

As regards output plans, Poland’s relative index values are traditionally in the minus because its manufacturing has failed to get out into a plus after the Covid crisis. The French industry reported the most optimistic plans and surpassed in terms of this indicator the Swedish industry.