Russia's services sector grows at fastest pace in a year - PMI

MOSCOW Reuters- Russia's services sector increased in July at its fastest pace in more than a year, a business survey showed on Wednesday as strong domestic demand outweighed slumping export orders for Russia's increasingly isolated firms.

The S&P Global Purchasing Managers' Index, PMI, went to 54.7 in July, its highest since June 2021 and up from 51.7 in June this year, moving further clear of the 50 mark that denotes expansion.

S&P Global said that the output growth was the fastest for a year, with activity supported by a stronger upturn in new business.

New export orders fell substantially in July, limiting the strength of customer demand in the domestic market. Foreign client demand was hampered by the ongoing impact of sanctions. Russia's economy has been hampered by Western sanctions against Moscow over its actions in Ukraine, with international business drying up as foreign clients turn away.

Service providers passed higher costs on to clients and average cost burdens increased in July.

Business confidence improved, with many citing hopes of improvements in the health of the wider economy and greater client demand, and although firms stepped up their hiring activity in July, backlogs of work went up sharply.

The rate of growth in incomplete business was the highest since November 2003, as firms cited new business, challenges finalising contracts and input shortages as factors behind the increase, S&P Global said.

A sister survey this week showed Russia's manufacturing sector held steady in July as the sector continues to struggle with diving exports and logistical problems in the face of Western sanctions.