Russia's service sector stagnates, output rises marginally in October

Russia’s service sector stagnated in October, with output seeing only a marginal rise and order falling for the first time in three months, said a report.

According to Reuters, the S&P Global Russia Services PMI Business Activity Index fell to 50.1 in October from 51.3 in September. The 50-point mark separates growth from contraction. The country’s economy saw new businesses fall for the first time in three months alongside a steep decline in export demand, which is picking up pace.

S&P Global said the drop in international demand was the third-largest since December 2022.


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On employment, Russia saw marginal hiring growth after eight months of job cuts. Its outstanding business saw its sixth decline in the past seven months due to weaker inflows, which allowed firms to work through earlier orders.

Input cost inflation in Russia grew for the first time in three months, with firms raising their selling costs to the fastest rate in eight months to pass on the part of the higher costs.

Reuters reported that business confidence lowered for the second consecutive month in October, as economic uncertainty weighed on expectations.

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Going ‘Berserk’

The report comes following Russian diplomat, Boris Titov's earlier comment to RBC news, stating that the country’s economy risked running "berserk" if it were to focus entirely on its military industrial complex.

Russia had earlier raised taxes, redistributed property and accepted financial contributions from businesses to fund the ongoing war with Ukraine.

The country’s economy is only expected to grow 0.4% this year, with many non-military sectors stagnating or shrinking. Recurrent Ukrainian attacks on civilian economic infrastructure may cause its growth to slip further, according to Reuters.

(With inputs from Reuters)