Russia’s Services Sector Growth in January

(Reuters) – Russia’s services sector saw its fastest growth in a year in January, buoyed by a sharp increase in new business, according to a survey released on Wednesday.

The S&P Global Purchasing Managers’ Index (PMI) for Russian services rose to 54.6 in January from 51.2 in December, indicating strong output expansion. A reading above 50 signals growth in activity, while below 50 indicates contraction.

New business at Russian services firms increased for the seventh consecutive month, with the pace of growth at its quickest in 12 months. The survey attributed this improvement to enhanced demand conditions and diversification of services offered.

However, inflationary pressures intensified during this period. Input prices rose at the fastest rate in a year, driven by higher supplier and transportation costs, along with increased wage bills. In response, firms raised output prices at the joint-quickest pace since July 2024.

Employment in the services sector continued to rise, although the pace of job creation eased from December.

Furthermore, backlogs of work accumulated for the third month in a row, as new order inflows strained capacity. The level of incomplete business rose at the second-fastest rate since August 2023.

Despite these challenges, business confidence improved, with optimism about future output reaching its highest level since September 2024.