Russia’s services sector contracts further in July ’25

Russia’s services sector saw a sharper contraction in business activity in July, driven by a renewed drop in new orders, according to the latest S&P Global PMI survey released on Tuesday.

The seasonally adjusted Russia Services PMI fell to 48.6 in July from 49.2 in June, marking the steepest decline since June 2024. Readings below 50 indicate contraction. Weak client demand and a fall in new sales—ending a year-long growth streak—were key contributors to the downturn.

New business declined at the fastest pace since January 2023, with firms citing reduced customer numbers and a sluggish sales environment. However, the easing in order inflows relieved pressure on capacity, as backlogs of work rose only slightly.

Despite the subdued demand, the sector recorded the fastest rise in employment since February, as firms prepared for a potential recovery.

Business sentiment improved, with the outlook for future output reaching a three-month high, reflecting hopes for economic stabilisation and strategic client outreach.

Cost pressures rose slightly in July, attributed to higher utility, supplier, and staffing expenses. Yet, inflation remained muted compared to historical averages. Output charges also increased, though firms’ pricing power remained constrained by weak demand.

The broader S&P Global Russia Composite PMI Output Index fell to 47.8 in July from 48.5 in June, signalling the sharpest private sector downturn since October 2022, with both manufacturing and services posting declines.

Attribution: Amwal Al Ghad English

Subediting: M.S.Salama