Russia's Services PMI accelerated in pre-invasion February

Russia's Services PMI accelerated in pre-invasion February
Russia's Services PMI accelerated in pre-invasion February / bne IntelliNews
By bne IntelliNews March 4, 2022

Russian service providers registered a modest expansion in business activity midway in February 2022, according to IHS Markit's report noting that the rise in output followed four months of contraction and was the fastest since last July. 

As reported by bne IntelliNews, Russian goods producers registered a marginal improvement in the health of the sector at the start of 2022.

However, most of the indicators relying on data collected before the Russian military sanctions on February 24 for now are largely irrelevant due to the deep shock experienced by the Russian economy resulting from an avalanche of Western sanctions.

The seasonally adjusted IHS Markit Russia Services Business Activity Index registered 52.1 in February, up from 49.8 in January, and above the 50.0 no-change mark indicating expansion.

The IHS Markit Russia Composite PMI Output Index (both manufacturing and services) posted 50.8 in February, up slightly from 50.3 in January. "Although output growth was only marginal, it was the fastest since last July, despite a renewed contraction in manufacturing production," IHS Markit commented. 

For the service providers, new business was broadly unchanged in February, as domestic demand weighed on the upturn and new export orders returned to growth. Despite moves towards an improvement in demand conditions, firms continued to cut workforce numbers, and at the quickest pace since December 2020. 

"A number of firms stated that customer activity was picking up again, whereas others highlighted the pandemic's ongoing impact on client demand," the report reads.

Relatively muted demand conditions led to a further fall in employment during February. Waning pressure on capacity resulted in the fastest decline in workforce numbers since December 2020 and a sharp decrease in backlogs of work in the reporting month.

Still, the degree of confidence among service providers prior to the Ukraine invasion was the strongest since September 2021 amid planned investment in new product lines and hopes of an uptick in client demand.