Business Activity in Russia's Services Sector

(Reuters) – Business activity in Russia's services sector grew at a slower pace in September amid a weaker rise in demand, according to a survey released on Thursday. Firms have also moderated their hiring efforts.

The S&P Global Purchasing Managers' Index for Russian services fell to 50.5 in September from 52.3 in August. This indicates only a fractional rise in output, where any reading above 50 signals growth, while below 50 indicates contraction.

Inflationary pressures have led companies to pass on higher costs to customers, resulting in a historically strong increase in selling prices, as stated by S&P Global.

The pace of job creation eased to its weakest level since February, with new orders increasing for the third consecutive month, albeit at a slower pace than in August.

S&P Global noted, "Anecdotal evidence indicated that despite average demand increasing, there were instances of a slowdown in client activity."

The survey also highlighted signs of spare capacity, with backlogs of work decreasing for the sixth consecutive month. Despite this, confidence in future activity rose to its highest level since May.

"Despite the uptick in demand conditions losing momentum, planned investment in advertising and hopes of greater new orders spurred business confidence," S&P Global said.

Additionally, a sister survey published on Tuesday indicated that activity in Russia's manufacturing sector contracted for the first time in over two years in September, driven by declines in output levels, new orders, and employment.