Russia Services Sector Shrinks for 2nd Month

The S&P Global Russia Services PMI climbed to 49.7 in April 2026 from 49.5 in the previous month, marking the second consecutive month of contraction in the sector. The contraction was driven by declines in output and attributed to weak client demand and a reduction in new orders for the first time in six months, though only fractionally, amid financial difficulties among customers. In line with lower new orders, firms reduced employment, with job shedding easing compared with March and remaining modest overall. On the price front, input costs rose due to higher supplier prices and ongoing adjustments to the recent VAT hike. However, price inflation eased further from January’s recent high and was softer than the series trend. Meanwhile, output costs rose as firms passed through higher costs to customers, despite inflation slowing. Finally, business sentiment weakened to its lowest level in 40 months amid challenging financial conditions.

The S&P Global Russia Services PMI fell to 49.5 in March 2026 from 51.3 in February, entering contraction territory and marking the first decline in six months. The drop was driven by softer demand conditions, with new orders broadly unchanged. Some firms reported stable customer numbers, while others cited weaker purchasing power, rising uncertainty, and lost business linked to the Middle East conflict. Meanwhile, employment declined at the fastest pace since early 2023, as firms cut costs amid weaker sales. On the price front, input costs and output charges both increased sharply, although inflation eased for a second consecutive month from January’s VAT-driven spike. Higher raw material and supplier prices, along with tax pass-through effects, remained key drivers of cost pressures. Looking ahead, business confidence improved from February, though overall sentiment remained relatively subdued by historical standards.

The S&P Global Russia Services PMI fell to 51.3 in February 2026 from 53.1 in January, signaling a modest upturn in business activity at the slowest pace in five months. New orders continued to rise for the fourth consecutive month, supported by steady customer demand, but growth slowed to its weakest since November 2025. Meanwhile, service sector employment fell for the second time in three months, although job losses were only fractional, with many firms citing voluntary leavers who were not replaced. On the price front, input costs rose sharply in February. While easing from January’s VAT-driven highs, inflation remained the second-fastest since January 2025, driven by higher fuel and utility prices. Output charges also increased steeply, marking the second-fastest rise since October 2023. Looking ahead, business confidence slipped to its lowest level since December 2022, as higher costs weighed on growth expectations despite continued optimism about demand.