Russia: Services PMI improves in December
January 3, 2022
The IHS Markit Services Purchasing Managers’ Index (PMI) rose to 49.5 in December from November's 47.1. Consequently, the index moved closer to the 50-threshold, signaling a softer deterioration in business conditions compared to the previous month.
The improvement was chiefly driven by a softer fall in output, although demand conditions remained weak. New business contracted at the second-fastest pace since October 2020, mostly due to rising Covid-19 cases and associated restrictions, in turn prompting services providers to cut employment levels for the third time in the last five months, and at the joint-sharpest pace in 2021. Lastly, unfavorable exchange rates, higher transportation costs and rising salaries continued to fuel inflationary pressures in December.
Commenting on the composite result and private sector outlook for 2022, Siân Jones, a senior economist at IHS Markit, said:
"Headwinds facing Russian private sector firms will be significant going into 2022, as high inflation, growing Covid-19 cases and weak demand threaten the near-term outlook. At the composite level, business confidence sank to the lowest since October 2020. Our current forecast estimates that the economy will grow 3.4% on the year in 2022, with the overall expansion slowing from the 4.1% expected in 2021."