Russian services activity shrinks for third month running in Dec -PMI

MOSCOW (Reuters) – Activity in Russia’s service industry contracted for the third month in a row in December, it was shown on Friday.

The S&P Global Purchasing Managers Index (PMI) for Russia’s services sector fell to 45.9 from 48.3 last month, further below the 50 mark that separates expansion and contraction.

S&P Global said in a statement that the drop in new business was due to economic uncertainty and a decline in customers’ purchasing power amid severe inflationary pressures.

Annual inflation in 2023 is projected to be between 5% and 7%, down from this year’s double-digit figures but still above the central bank’s target of 4%.

Geopolitics have hit the services sector particularly hard, and Western sanctions against Russia over Russia’s actions in Ukraine have exacerbated logistical problems for Russian companies.

The business confidence index plummeted to 45.8 in December from 61.3 the previous month.

“Uncertainty in the global economy and the impact of inflation on the purchasing power of customers reportedly worsened sentiment significantly,” S&P Global said. “Sentiment levels were the lowest since March.”

A sister survey on Thursday showed manufacturing activity in Russia expanded in December as domestic demand outpaced a decline in export sales, leading to the sector’s fastest monthly job creation in more than 21 years.

(Reporting by Alexander Murrow; Editing by Hugh Lawson)

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