Russia’s services economy registered a modest expansion in November, according to new survey data from S&P Global, even as the broader private sector showed signs of stagnation. (chart)

The S&P Global Russia Services PMI Business Activity Index rose to 52.2, up from 51.7 in October, indicating the fastest pace of growth in six months. However, this upturn was counterbalanced by a sharper contraction in manufacturing output, leaving the Composite PMI little changed at 50.1.

“The Russian service sector remained in growth territory during November,” S&P Global stated in its report, published on December 1. The data showed that output growth was driven by renewed increases in new orders, following four months of decline. Although the rebound in sales was described as “only fractional,” it was attributed to improved customer demand and new client acquisitions via referrals.

The gain in the services PMI comes after Russia’s manufacturing PMI contracted for sixth straight month to 48.3 in November as output dropped sharply on the back of a slowing economy.

Services are more buoyant as firms responded to the uptick in demand by increasing staffing levels, although the rate of job creation slowed to a four-month low.

“The hiring of largely full-time staff to support business requirements was reported,” S&P Global noted. Despite the rise in employment, capacity pressures persisted, with backlogs of work increasing for the second consecutive month and at the quickest pace since June.

Cost pressures remained elevated but softened slightly in the services sector. Input cost inflation, driven by higher wages and supplier prices, was below the series trend, while output charges rose at a slower rate. “Higher selling prices were due to the pass-through of greater costs to clients,” the report said.

Looking ahead, business sentiment showed a modest recovery from October’s near three-year low. “Russian services companies registered stronger expectations regarding output over the coming year,” S&P Global reported, citing plans for new product launches and increased investment in customer engagement. Still, the overall level of confidence remained subdued by historical standards.

In contrast, the composite reading — which combines services and manufacturing — pointed to near-stagnant activity. The manufacturing sector continued to decline, and only the rebound in services prevented a broader contraction. Nonetheless, both goods producers and service providers reported improved expectations for future output.

“New sales across the private sector stabilised in November,” S&P Global concluded, noting that cost and price pressures, while present, were below historical averages across both segments.