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MOSCOW (Reuters) – Russia’s services sector shrank for the third month in a row in December as new orders fell, with business confidence falling to its lowest level in more than a year, a business poll showed on Thursday.
The Markit Purchasing Managers ’Index (PMI) for the services sector rose to 49.5 from 47.1 in November, but fell below the 50 mark that separates expansion and contraction.
“The sector has been particularly hard hit by COVID-19 cuts, especially in consumer-facing industries,” said Sian Jones, senior economist at IHS Markit survey.
Weak demand from domestic and foreign customers led to overcapacity, which led to a renewed contraction in the number of employees, as the monthly survey showed.
The cost burden has risen in the services sector due to higher entry prices due to inadequate exchange rates, rising fuel and wage costs and rising subcontractor fees.
Confidence in companies in the services sector has fallen to its lowest level since October 2020, although expectations of a resurgence in customer demand have remained the same.
“The obstacles facing Russian private sector companies will be significant in 2022, as high inflation, rising COVID-19 cases and weak demand threaten short-term forecasts,” Jones said.
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