Russian Services PMI Contracts in December as Consumers Cut Back

  • Services PMI fell to 47.8, below 48.3 median estimate
  • Contraction continued for third month as recession drags on

Shrinking consumer demand caused Russian services from restaurants to telecommunications to contract for the third consecutive month in December, a further blow to an economy struggling to avoid a second year of recession.

The Russian Services Purchasing Managers’ Index fell to 47.8 in December from 49.8 in November, according to a statement released Thursday by Markit Economics. The median estimate of seven economists surveyed by Bloomberg was for 48.3, below the threshold of 50 that separates contraction from growth.

“The latest decline in business activity was driven by a further contraction in new business,” Samuel Agass, an economist at Markit, said in the statement. “Elsewhere, job cuts continued in December, with both manufacturers and service providers lowering their staffing numbers.”

With plunging global oil prices hammering the economy of the world’s biggest energy exporter and undercutting the ruble, consumers are cutting back. A collapse in retail sales unexpectedly deepened in November, falling 13.1 percent from a year earlier for its biggest contraction since 1999. While President Vladimir Putin said last month that Russia had left the worst of the economic crisis behind, gross domestic product shrank in November on a seasonally adjusted basis for the first time in five months.

The ruble has dropped more than 20 percent against the dollar this year, while inflation eased to 15 percent in November after reaching a 13-year high of 16.9 percent in March. The ruble fell 1.9 percent at 11:22 a.m. in Moscow to 73.5900 against the dollar.

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