December survey data signalled a worsening of the downturn in the Russian service sector. A fall in output was reported for the third successive month amid a slight decrease in new business levels.
Article continues below
Job cuts continued in the sector as outstanding business deteriorated. Meanwhile, operating margins were under pressure as a marked increase in cost burdens outstripped the modest rise in average tariffs set by firms.
The headline seasonally adjusted Russia Services Business Activity Index posted 47.8 i
n December. Having scored 49.8 in November, the latest figur
signals a deeper slide into contraction territory for the Russian service sector.
Meanwhile, Russia's composite index slipped into contraction during December. Scor
ing 47.8, down from 50.5 in November, the decline in outpu
reflected lower levels of manufacturing production and services activity.
New business levels at service providers slipped further into decline during December. However, the rate at which new work deteriorated was only marginal. Where a lower volume of new sales was recorded, panellists linked this to a combination of waning demand in the sector and payment difficulties being experienced by customers.
A contraction in new orders was also recorded in the manufacturing sector, with the decline in new work the first reported in four months.
With business activity at Russian service providers declining, pressures on operating capacity fell further in December. The rate at which work-in-hand depleted eased to the slowest in three months yet remained solid overall.
Anecdotal evidence suggested that lower backlogs of work were attributed to a drop in new business. Similarly, Russian goods producers registered a robust contraction in their backlogs of work, which have deteriorated in every month since March 2013.
Job shedding in the service sector persisted during December. Falling staff numbers have been reported in every month since March 2014, with the latest drop at a faster pace than in November.
There was some evidence that lower employment reflected squeezed cash availability at service providers. This was matched by a further solid
contraction in staffing levels at manufacturers, who attributed the decline to a drop in production and new orders. ■