MOSCOW – Russia’s services sector suffered its strongest contraction in over a year in November as client demand declined at a sharper pace and new export orders stagnated, a business survey showed on Friday.
IHS Markit’s Purchasing Managers’ Index (PMI) fell to 47.1 in November from 48.8 in October, below the 50 mark that separates expansion from contraction. It was the index’s lowest mark since October 2020.
“Domestic and foreign client demand weakened as firms moderated their optimism regarding future output,” said Sian Jones, senior economist at survey compiler IHS Markit.
Cost pressures intensified. Input prices grew at the fastest pace for six months due to higher fuel, wage and supply costs.
Employment was broadly unchanged in November, following a marginal contraction in the previous month, but business confidence softened to its lowest since August.
“Demand conditions are unlikely to improve in the service sector significantly until virus cases are brought down and COVID-19 restrictions are no longer necessary,” Jones said.
She added that obstacles surrounding vaccination rates were likely to hamper the path of the recovery going into the next year.
A separate survey showed on Wednesday that Russian manufacturing activity expanded marginally in November as new orders growth accelerated.