Russia Services Growth Hits 8-Month Low

The S&P Global Russia Services PMI declined to 48.7 in May 2026 from 49.7 in the previous month, marking the third consecutive month of contraction in the sector. The latest reading also marked the steepest contraction since last September, driven by declines in output and a sharper fall in new sales. In line with lower new orders, firms reduced employment, with the pace of job shedding easing to its slowest level in three months. On the price front, input costs rose due to higher supplier prices, energy costs, and wage bills. However, input price inflation eased to its lowest level since last December. Meanwhile, output charges also increased as firms passed higher costs on to customers, although output price inflation slowed from January's recent VAT-driven peak and was the weakest so far in 2026. Finally, business sentiment weakened to its lowest level since the end of 2022 amid subdued demand.

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.