Russia's service sector deteriorated at the fastest pace in eleven years in March, as employment, new business and foreign client demand decreased amid COVID-19 outbreak, survey data from IHS Markit showed on Friday.
The services Purchasing Managers' Index fell to 37.1 in March from 52.0 in February. The score signaled the fastest decline in eleven years. Any score below 50 indicates contraction in the sector.
New business declined at a sharp rate in March as the output decreased. Total sales declined at the quickest since February 2009, as the public health measures were taken to halt the spread of COVID-19 in the country and key export destinations.
New export orders declined at the strongest rate since September 2014. Reduction in new orders led to the lowering of business requirements which led to the contraction in the employment in March with the rate of decline fastest since January 2016.
Backlogs of works decreased in March with the decline in new business.
Business confidence turned negative for the first time since early-2016 and was the lowest in the series history. Some firms noted that customer closures weighed on the sentiment.
Cost burdens increased at a strong pace in March and supplier shortages following factory closures and transportation delays raised the prices. Input price inflation was the fastest in a year, soon after the hike in VAT. Selling prices rose despite weaker demand condition.
The composite output index declined to 39.5 in March from 50.9 in February due to contraction in the manufacturing and services sectors. The decline was the greatest over eleven years, amid coronavirus outbreak.
"Demand for Russian services fell at the fastest pace since the financial crisis as domestic and foreign customers reduced new order placements," Sian Jones, an economist at IHS Markit, said.
"The rate of inflation is forecast to quicken throughout 2020," Jones added.
For comments and feedback contact: editorial@rttnews.com
Economic News
What parts of the world are seeing the best (and worst) economic performances lately? Click here to check out our Econ Scorecard and find out! See up-to-the-moment rankings for the best and worst performers in GDP, unemployment rate, inflation and much more.