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 business survey released on Thursday. Firms also moderated their hiring efforts.

The S&P Global Purchasing Managers’ Index (PMI) for Russian services fell to 50.5 in September from 52.3 in August, indicating only a fractional rise in output. A reading above 50 signals growth, while below 50 indicates contraction.

Inflationary pressures 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 since February, the survey showed. New orders increased for the third consecutive month but at a slower pace than in August.

Anecdotal evidence noted that despite demand increasing on average, 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 month in a row. Despite this, confidence in future activity rose to its highest since May.

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

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