Growth in Russia’s services sector eased in December, with the S&P Global Russia Services PMI Business Activity Index falling to 51.2 from November’s 53.2, marking a three-month low. This represents the sixth consecutive month of expansion, albeit at a slower pace, as demand softened and cost pressures intensified.
Key Findings:
- Output Growth Moderation: While new orders continued to rise, the pace of output growth slowed due to muted customer demand.
- New Business: New client acquisitions sustained growth in new business, though at a reduced rate compared to November.
- Employment Growth: Workforce expansion hit a four-month high to address increased backlogs, which reached their steepest accumulation in 16 months.
- Cost Inflation: Input costs surged, driven by unfavorable exchange rates and higher supplier prices, marking the sharpest rise since January. However, selling price increases slowed as firms hesitated to fully pass on costs to customers.
- Business Confidence: Optimism about future activity dipped to its lowest level since July 2023, as cost concerns weighed on sentiment.
Broader Economic Context:
The slowdown extended to the overall private sector, with the composite PMI Output Index declining to 51.1 in December from 52.6 in November. This reflected weaker performance in both the manufacturing and services sectors, highlighting challenges amid rising costs and fluctuating demand.
The findings indicate a cautious outlook for Russia’s services sector as businesses navigate a complex economic environment marked by inflationary pressures and demand variability.
