News Column

Russia Service Sector Contraction Eases In June

July 3, 2014

MOSCOW (Alliance News) - Russia's service sector contracted at a modest pace in June, after declining at the fastest rate in five years in the previous month, survey figures from Markit Economics showed Thursday.

The seasonally adjusted HSBC purchasing managers' index for the services sector rose to 49.8 in June from May's five-year low of 46.1.

Any reading below 50 indicates contraction in the sector. The latest reading indicates only a marginal rate of contraction during the month.

The composite output index, which combines services and manufacturing, also rose to 50.1 in June from 47.1 in May.

The volume of incoming new business in the service sector was broadly stable in June, which followed the steepest decline seen for nearly five years during the previous two months. At the same time, manufacturing new orders fell in June, after rising slightly in the prior month.

Reflecting the subdued outlook, service providers continued to shed staff in June and the rate of decline remained solid, despite easing since May.

On the price front, inflationary pressures eased in June. Average input prices in the service sector rose at the slowest rate since October 2010. Service providers raised their charges, but the inflation weakened for the first time since January. In manufacturing, input as well as output price inflation slowed to four-month lows.

"Unfortunately, the recent spike in geopolitical tensions amid the Russia-Ukraine stand-off will likely have long lasting effects on private fixed investment growth in Russia", Artem Biryukov, Economist (CIS& Baltics) at HSBC said.

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Source: Alliance News

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