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. Last Updated: 07/27/2016

New Index Monitors Pulse of Economy




A London subsidiary of the Central Bank on Friday launched an index that it hopes will prevent surprises like the August 1998 economic crash by giving early warning of potentially damaging trends.


The index, commissioned by Moscow Narodny Bank in London to track the performance of the manufacturing sector, on Friday indicated that growth is on the way for Russia.


The Moscow Narodny Purchasing Managers' Index rose to 57.3 in September, well above the 50 "no change" mark, showing an upward trend in the manufacturing sector of the economy for the ninth month in a row, the bank said in a statement.


The bank said that improving economic performance in part reflected improved orders, which rose for the 11th consecutive month in September.


The index is calculated on the basis of a survey of 300 executives in Russian companies.


NTC Research, a British-based provider of business information, is compiling the index for the bank. The agency conducts similar monthly surveys in Britain, Germany, France, Italy, Spain and the United States.


"Our data is complementary to official statistics, which are not always very clear to foreigners," Luke Thompson, NTC's head of economic and financial publications, said.


Thompson added that interest in trustworthy economic data in Russia was heightened by the economic crisis last year. Western investors lost billions of dollars when Russian markets abruptly collapsed.


Industry players and analysts said the index would come in handy in tracking Russia's economic performance, but added that they often prefer to have access to more specific figures.


"Purchasing managers' indices are useful as they provide the first indication of economic trends each month and a consistent means of comparing activity between countries," Tony Norfield, global head of foreign exchange research with ABN-Amro, said.


"It is always better to look at discrete figures, like power output or transportation volumes, rather than aggregate indices," Sergei Rodionov, fixed-income analyst with Brunswick Warburg brokerage, said.


Alexei Zabotkin, an economist with the United Financial Group brokerage, said it made sense to follow indices such as Moscow Narodny's, but only if they were corroborated by selectively chosen specific data, such as order books, capacity utilization and data that shows business expectations. NTC officials said the firm would report both the index and other figures that provide deeper insight.


"Sometimes it's better to look at order books to see a turning point," Thompson said. "Employment, which is included in the aggregate index, is a lagging indicator."