Russian service industries from restaurants to telecommunications providers slumped more than economists forecast last month, dropping to the lowest since March as signs of economic distress intensify.
The Russia Services Business Activity Index dropped to 49.1 from 51.6 in July, according to a statement released Thursday by Markit Economics. The median estimate of six economists surveyed by Bloomberg was 50.3. The indicator fell below the 50 threshold that separates contraction from growth for the first time since June.
The “service sector stumbled in August, having shown tentative signs of improvement in July,” Paul Smith, senior economist at Markit, said in the statement. “A lot of the issues seem to be stemming from a challenging economic environment, which is undermining demand.”
A renewed selloff in oil and a weaker ruble are raising the risk that the economy of the world’s biggest energy exporter will struggle to cope with its first recession in six years. Hurting the services industry was “a general lack of growth” in new business, with the degree of positive sentiment at the lowest since March and employment falling at the sharpest pace in three months, according to Markit.
The 10-stock Micex Consumer Goods & Services Index has gained 15 percent this year, underperforming the broader Micex Index, which is up 22 percent. The ruble, the world’s worst performer globally against the dollar in the past 12 months with a 45 percent drop, was little changed at 67.0250 to the U.S. currency as of 12:31 p.m. in Moscow.