In March, Russia’s service sector saw unexpected growth, boosted by more new orders, according to the data in the monthly Markit Economics survey.
The Purchasing Managers’ Index (PMI) for the sector grew to 56.6 in March against February’s 3-month low of 55.5. Meanwhile, experts had expected the index to decline to 55.0.
A reading above 50 means expansion in the sector on a monthly basis, anything below indicates contraction.
“Business activity grew strongly in March with Russian service providers experiencing a faster rise in new orders,” said Sian Jones, an economist at IHS Markit, which compiles the survey.
Due to the increased orders, Russia’s service providers showed the strongest job creation since August 2013, according to the survey.
“Growth of activity was the second highest in over four years, and confidence remained close to its highest over the past three-and-a-half years,” the economist said.
At the same time, input prices faced by Russian companies rose at their weakest pace since August 2010. Sales prices were up at their slowest pace in five months as well.
According to the report, the central bank decision to cut interest rates as inflation slows also helped.
“A second month of easing inflationary pressures supported the recent decision by monetary policy makers to reduce interest rates,” said Jones.
Another PMI report published earlier this week revealed expansion in Russian manufacturing activity due to a surge in output and new orders.
“The composite index figure for March reflected solid growth across both sectors, and quarterly data suggested the strongest performance since the second quarter of 2008. IHS Markit forecast overall GDP growth of one percent in 2017. With employment and business activity showing improved trends in quarter one, this is a positive step toward a recovery,” Jones stressed.
Over 34 percent of the companies surveyed by IHS Markit reported a positive outlook for the future with some six percent displayed pessimism.
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