S&P Global reported the weakest rise in business activity in the Russian Federation in 13 months

S&P Global reported the weakest rise in business activity in the Russian Federation in 13 months

The business activity index (PMI) in the Russian services sector in February amounted to 51.1 points, S&P Global reported. In January, the index was at 55.8 points. Its decline, according to experts, signals “the weakest recovery in business activity over the current 13-month period.”

An index value above 50 points indicates an increase in economic activity, below - a decline.

According to (.pdf) S&P, business activity growth overall was weak and well below the long-term average. Companies noted an increase in the number of incoming orders, but many announced a slowdown in the growth of their number amid a decline in demand, which was also caused by an increase in prices for services.

“The slowest growth in new orders in more than a year has seen companies reduce hiring activity and business confidence, although job creation has slowed to negligible levels. Inflationary pressures on service providers have eased. Raw material costs rose at their weakest pace since July 2020, while sales promotion efforts resulted in selling prices rising at their slowest pace in 11 months,” the press release said.

Analysts said the pace of growth in export orders was the weakest since August 2023 due to logistics problems. Service companies softened rising input costs, and the rate of sales price inflation last month was the slowest since March 2023 and among the lowest in three years, S&P said. Problems with staff retention and slower order growth "led some firms not to replace those who left voluntarily, leading to only modest employment growth midway through the first quarter" and the pace of job creation was the slowest in the current seven-month period.

Representatives of the sector are optimistic about business prospects for the next 12 months. This is partly due to planned investments in expanding its customer base, the company said.

In his message to the Federal Assembly on February 29, President Vladimir Putin announced the launch of a new national project called “Personnel.” Its stated goal is to coordinate the professional self-realization of Russians with the capabilities of the education system and the changing requirements of the labor market. The final execution of this document will depend, among other things, on the situation with the forecast of personnel needs of the economy, which the government must formulate annually starting this year.

Details - in the material "Kommersant" "Department of Missing Personnel".

Laura Keffer

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