A gauge of Russian services from restaurants to telecommunications unexpectedly gained for a second month to the highest level since the end of 2013 as demand strengthened on the back of improved access to finance.
The Russia Services Business Activity Index rose to 52.8 in May from 50.7 in April, according to a statement released on Wednesday by HSBC Holdings Plc and Markit Economics Ltd. That was better than every forecast in a Bloomberg survey of six economists, whose median estimate was for 48.3. Readings above 50 indicate expansion.
The world’s largest energy exporter is adjusting after a plunge in oil prices and sanctions imposed over Ukraine ignited the ruble’s worst crisis since a 1998 default and pushed the nation to the brink of its first recession in six years. Consumption, which accounts for about half the economy, is getting a respite after the Bank of Russia took advantage of the ruble’s world’s best-rally this year to cut interest rates three times since an emergency increase in December.
“The services economy was the principal driver of the expansion, registering solid gains in both output and new orders,” Paul Smith, senior economist at Markit, said in the statement. “Although service providers may be benefiting from a modicum of import substitution among businesses and consumers, the latest data does suggest that underlying domestic economic conditions are steadily improving.”
The ruble, which has appreciated 14 percent against the dollar in 2015, weakened 0.9 percent to 53.2490 versus the U.S. currency as of 12:20 p.m. in Moscow. Derivatives traders see borrowing costs falling further, with forward-rate agreements signaling 73 basis points of decreases in the next three months.