MOSCOW (Reuters) – Russia’s service sector in May showed its sharpest upturn in activity in nine months thanks to growth in new business as domestic demand conditions improved, the Markit purchasing managers index (PMI) showed on Thursday.
The index’s headline figure rose to 57.5 in May from 55.2 in April, above the 50 mark that separates expansion from contraction.
“The Russian service sector posted a strong expansion in May, with rates of growth in output and new orders quickening. Although the expansion in exports waned slightly, domestic demand supported the upturn in total sales,” said Sian Jones, an economist at survey compiler IHS Markit.
New orders rose at the quickest pace since August 2020 as greater confidence among customers boosted spending, while new export orders grew for the third month in a row.
Cost pressures continued to mount in May, with the rate of input price inflation accelerating to the fastest since June 2008. The survey participants linked higher input prices to greater supplier charges, additional transportation fees and an increase in fuel costs.
“Business confidence for the year ahead was knocked midway through the second quarter, as firms expressed concerns regarding inflation and the ability of customers to pay higher prices for goods and services,” Jones said.
A sister survey on Tuesday showed growth in Russia’s manufacturing sector expanded in May at its fastest pace in more than two years.
(Reporting by Anna Rzhevkina; Editing by Toby Chopra)