Russia’s service sector activity contracted unexpectedly in October, as new work stagnated and excess capacity persisted, survey figures from Markit Economics showed Thursday.
The seasonally adjusted services Purchasing Managers’ Index, or PMI, dropped markedly to an eight-month low of 47.8 in October from 51.3 in September. Economists had expected the index to fall to 50.4.
Any reading above 50 suggests expansion, while a score below 50 indicates contraction in the sector.
At the same time, manufacturing output climbed for the second successive month in October and to the o the highest degree since last November.
Nevertheless, the composite output index, which combines services and manufacturing also slipped to a seven-month low of 49.0 in October from 50.9 in September.
New orders received by the service sector stagnated in October, ending its six-month sequence of growth.
Consequently, backlogs fell to the greatest degree in five months and encouraged service providers to make further reductions to their staffing levels. The rate of job shedding marked the sharpest since February.
Manufacturing employment also dropped in October, though to a much lesser degree than seen at service providers.
On the price front, input price inflation intensified to a seven-month peak in October. Selling prices also grew during the month, although the pace of inflation was the lowest seen for three months.
Input charges at manufacturers also rose sharply in October, but the rate of inflation slowed to a three-month low. Output charges also rose at a reduced pace.
“The environment is clearly challenging for service providers at the moment, especially given panel members’ quoted issues of difficult access to capital and credit lines,” Paul Smith, Senior Economist at Markit, said.
“Still, signs of modest growth in manufacturing during October do raise some tentative hopes of eventual positive spill-over effects to the services economy in the coming months.”
The material has been provided by InstaForex Company – www.instaforex.com