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Russia Service Sector Contraction Continues In April

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Russia’s service sector activity registered a further sharp deterioration in April as output and new orders fell amid sanctions, survey data from S&P Global showed Friday.

The seasonally adjusted services Purchasing Managers’ Index, or PMI, rose to 44.5 in April from 38.1 in March. However, any reading below 50 suggests contraction in the sector.

New orders fell for the seventh successive month in April due to lower client demand, linked to the introduction of sanctions and higher interest rates. The rate of decline was the second -sharpest in almost two years.

Input price inflation marked the second-sharpest on record, led by greater supplier and wage costs. Some companies reported that sanctions had led to the recent upturn in imported input costs.

As a result, companies were forced to increase selling prices in April, at the second-fastest pace since data collection started in October 2001. Employment levels decreased further, in line with lower business conditions.

Looking ahead, Russian services companies remained pessimistic regarding the output for the next twelve months as weaker demand conditions and the introduction of sanctions reportedly weighed on business confidence in April.

Data also showed that composite PMI Output index rose to 44.4 in April from 37.7 in March.

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