Russia's service industry growth slows to a five-month low

Investing.com – According to data released on Wednesday, Russia’s service providers experienced a slowdown in business activity expansion in February, with the S&P Global Russia Services PMI Business Activity Index falling from 53.1 in January to 51.3.

The February reading marked the weakest growth in the current five-month expansion streak, although it remained above the 50 mark that separates growth from contraction. Service companies attributed the output increase to higher new orders and more customers.

New business in Russia’s service sector expanded for the fourth consecutive month, but the growth rate slowed to its weakest level since November 2025. Firms linked the sustained rise in new sales to improved customer demand.

Input costs rose sharply in February, with inflation easing from a two-year high in January, but still marking the second-fastest increase since January 2025. Companies cited rising fuel and utility prices, as well as the ongoing pass-through effects of VAT increases from suppliers.

Selling prices increased steeply, with output cost inflation at its second-fastest pace since October 2023. Firms raised prices to offset higher costs.

Employment declined for the second time in three months, after a brief increase in January. The reduction was modest, with companies noting that voluntary leavers were generally not replaced.

As ongoing growth in new orders continued to pressure service sector capacity, backlogs of work increased at the fastest rate since December 2024.

Business confidence for the next year weakened to its lowest level since December 2022, falling below the series trend. Although companies remain hopeful about stronger demand, higher costs have raised concerns about the outlook.

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