Nov. 6 (Bloomberg) -- Russia’s economy shrank in October at the slowest monthly pace in almost a year, a gauge of output showed, as conditions in the world’s biggest energy exporter continued to improve.

Gross domestic product shrank 0.6 percent in October from a year earlier after a 2.1 percent contraction in September, VTB Capital said in a report today.

“The manufacturing sector’s performance deteriorated slightly while activity in the services sector is approaching pre-crisis levels,” Aleksandra Evtifyeva, a senior economist at VTB Capital in Moscow, said in the report. “Another encouraging development highlighted by the October surveys was the deceleration in the pace of job cuts.”

An 80 percent surge in the price of Urals crude is helping Russia’s economy recover after a record 10.9 percent contraction in the second quarter. Russia came out of a recession in the third quarter, Finance Minister Alexei Kudrin said last month. Unemployment fell to 7.6 percent in September.

VTB Capital calculates the indicator by using output measures from its Purchasing Managers’ Indexes, which are surveys of business conditions in manufacturing and services industries.

To contact the reporter on this story: Alex Nicholson in Moscow at anicholson6@bloomberg.net.

Last Updated: November 6, 2009 00:00 EST