The growth of business activity in the service sector in Russia is slowing for the third month in a row

At the end of November, the Russian service sector PMI index amounted to 52.2 points, down from 53.6 points in October, the rating agency S&P Global reported. Experts announced a slowdown in business activity in the private sector. The decline in growth rates is the third month in a row, after the maximum values ​​​​achieved in August.

According to the press release (.pdf) S&P Global, moderate growth is due to slower new business growth. Despite the renewed decline in new export orders, international demand for Russian services remained high. The rise in input costs was “softer” and companies continued to expand employment and the pace of job creation was the fastest in three months, experts said.

“In November, Russian service providers recorded a moderate expansion in business activity. The pace of growth has slowed markedly as new business growth has slowed. However, companies continued to expand employment due to continued pressure on production capacity. Companies remain optimistic about production prospects, with confidence remaining close to its October high,” the press release said.

It noted that commodity prices rose at a “historically high” pace, but “efforts to remain competitive hampered companies’ ability to raise costs,” and their costs rose at the slowest pace since May. Growth in new orders was also the weakest since May. As S&P clarifies, the reason was, among other things, that “lower purchasing power among customers puts pressure on demand.” However, new export orders “grew at a remarkable pace” – their growth rate was one of the fastest in more than nine years and was supported by strong demand from neighboring countries. In response, service providers again raised selling prices, the agency notes.

November monitoring of enterprises of the Russian Central Bank showedthat the deterioration of current assessments of the business climate in the Russian Federation, which began in June, continues, while expectations continue to grow. The most significant improvement in expectations was observed in the retail and service sectors. Expectations in mining and motor vehicle trade have become more restrained.

Laura Keffer