Russia’s business activity declines in May, PMI shows

Russia’s business activity experienced a renewed decline in May, as the S&P Global Russia Services PMI showed on Wednesday that the business activity index fell to 49.8 from April’s 50.5.

This represents the first contraction since January 2023, driven by near-stagnant new business inflows and broadly unchanged levels of client demand. Despite a minor uptick in job creation and improved business confidence, companies struggled to attract new orders.

Cost pressures have also regained momentum, as input prices surged at the fastest pace since January, driven by higher transport and supplier costs alongside increased wages. This inflationary trend pushed selling prices up sharply, although the overall rate remained slower than the average seen between 2021 and 2023.

The composite PMI, which combines manufacturing and services data, edged up slightly to 51.4 in May from 51.0 in April, indicating marginal overall growth in private sector output.

This modest improvement was supported by an uptick in manufacturing output, while the service sector experienced a downturn. Employment trends varied, with services showing slower job creation, whereas manufacturers increased hiring, leading to near-record levels of factory employment growth.

Overall, the Russian private sector continues to face mixed conditions, with significant cost pressures and a challenging demand environment reflecting broader economic uncertainties.