MOSCOW, Feb 4 (Reuters) - Russia's services sector expanded at its fastest pace in a year in January, buoyed by stronger demand and a rise in new orders, an S&P Global survey showed on Wednesday. The
Russia's Services Sector Experiences Strongest Growth in a Year
Overview of Russia's Services Sector Growth
MOSCOW, Feb 4 (Reuters) - Russia's services sector expanded at its fastest pace in a year in January, buoyed by stronger demand and a rise in new orders, an S&P Global survey showed on Wednesday.
Drivers of Growth
The S&P Global Russia Services PMI Business Activity Index rose to 53.1 in January from 52.3 in December, marking a solid upturn in output. A PMI reading above 50 indicates growth in activity, while below 50 signals contraction.
Impact of VAT Increase
The sector's growth was driven by improved customer demand and successful advertising campaigns, leading to a third consecutive monthly rise in new business and the fastest in 12 months.
Employment Trends
However, the recent increase in the value-added tax has significantly pushed up costs, with input prices rising at the sharpest rate in two years.
Business Confidence Levels
"Operating expenses rose markedly as supplier prices increased in response," the report noted.
Consequently, the rate of charge inflation accelerated to its highest since August 2023 as firms passed on higher costs to clients.
Employment in the services sector saw a renewed increase after a decline in December, though job creation was minimal. The rise in employment was attributed to greater new order inflows.
Despite the challenges posed by inflationary pressures, business confidence improved, reaching a four-month high, with firms optimistic about greater activity in the coming year due to increased advertising and new service lines.
However, the degree of optimism remained below the series average.
(Reporting by Gleb Bryanski; Editing by Joe Bavier)
