The Russian service sector is in crisis

IHS Markit: PMI in services was 47.1 points

PMI in Russian services was 47 , 1 point – 1.7 points less than in October. This is stated in a study by IHS Markit.

According to the method of calculating the index, a fall below 50 points means a decline in economic activity. The decline in performance has accelerated, becoming the fastest since October 2020. The service industry has found itself in crisis due to weak consumer demand and re-imposition of coronavirus restrictions. In November, weak demand also affected international customers, while export orders rose in October.

Manufacturing costs increased in November. Service providers reported the fastest increases in costs in six months, one of the highest on record. The rise in prices for raw materials is associated with an increase in fuel costs, wages and supplies. In addition, entrepreneurs reported high inflation rates that were above the long-term average. In general, business expectations of Russian service providers have decreased, despite the optimistic forecasts for production volumes for 2022.

The study was conducted from November 12 to 26, 2021. The service sector includes consumer services (excluding retail), transport, information, communication, finance, insurance, real estate and other professional services.

In mid-November, Rosstat reported that in the first half of 2021, the turnover of small business in the country accounted for 11.5 percent of the total volume of small, medium and large enterprises. This value has become the minimum since 2008.

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