The increase in activity in the services sector accelerated to its highest in four years

The purchasing managers ‘ index (PMI) for the Russian service at the end of December 2016 reached 56.5 points (from 54.7 in November), to the report by Markit. Thus, the index value exceeded recorded in July, the high of the year (55 points), but showed absolutely the best result for 49 months.

In a report, Markit noted that the main factor of strengthening of business activity in the services sector was the growth of demand. The increase in new orders was the largest since August 2016, with the largest increase was noted by the owners of hotels and restaurants.

The number of jobs in the industry continues to shrink, although the rate of decline was reduced to a minimum. In some segments of the services sector Markit experts have even recorded a significant increase in the number of employees, however, the new contraction in the sub-sector “Hotels and restaurants” did not allow for overall sales to reach the critical level of 50 points, above which indicates growth.

The alarm signal in December, it was the accelerated growth of costs in the service sector, which reached a peak of 2016. Study participants Markit explained the rapid increase in expenditures due to higher fuel prices. Rising costs led to a new increase in selling prices, which are increasing 85 consecutive months, however, compared to the purchase prices output prices growth was relatively weak.

According to Markit, the average value of the PMI index in the services sector in the fourth quarter of 2016 was the largest since the beginning of 2013. The improvement in the services sector resulted in an overall improved market conditions in the private sector — the combined index reached 56.6 points, which also has a maximum of four years.

“The growth in the Russian services sector has shifted into high gear at the end of 2016. In the manufacturing sector continued higher growth, the rate of which was more substantial than the colleagues in the services sector. As a result, overall growth in the private sector accelerated to 50-month high,” — said economist at Markit Samuel Agassi.