The IHS Markit Russia Services Business Activity Index – a single-figure measure designed to track changes in total Russian services activity – posted 49.7 in June, down from 52.0 in May, and slipped into negative territory. Any result below the no-change 50 mark is a contraction.
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The average result for services in the second quarter indicated the slowest expansion in service sector output since the first quarter of 2016.
The Russia Composite Output Index is a weighted average of the Russia Manufacturing Output Index and the Russia Services Business Activity Index.
The Composite Output Index registered 49.2 in June, down from 51.5 in May. The decrease in overall business activity was the first since the start of 2016, as both manufacturing and services firms recorded a fall in output.
In June the seasonally adjusted Manufacturing Purchasing Managers’ Index fell to 48.6, down from 49.8 in May – its lowest level in a year.
The falls in both manufacturing and services were due to the evaporation of new business as conditions get tighter. However, the Russian PMI results are also partly due to a cooling of the global economy caused by the trade war between the U.S. and China. Other markets also saw their PMIs fall: Czechia’s PMI fell to its lowest level in ten years, Poland’s PMI fell to its lowest level in four years and Hungary’s PMI was also in retreat in June, as bne IntelliNews reported.
Weaker demand conditions had the knock-on effect of reducing workforce numbers at a solid rate in Russia that was the fastest since April 2016.
The notable turnaround in client demand also caused a drop in business confidence, which has until now been fairly optimistic about the prospects for this year.
Business expectations dipped to a three-month low amid less favorable demand conditions and weaker client purchasing power. The degree of confidence is now below the long-run series average, says Markit.
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