© Reuters. FILE PHOTO: A wellhead and drilling rig at the Yarakta oilfield, owned by Irkutsk Oil Company (INK), in Irkutsk region, Russia March 11, 2019. REUTERS/Vasily Fedosenko/File Photo
(Reuters) – Business activity in Russia’s services sector returned to growth in February as inflationary pressures eased and business confidence rose to its highest level in five months, the index showed on Thursday. Markit of Purchasing Managers (PMI).
The precise dates of the investigation, which made no mention of Russia’s invasion of Ukraine, were unclear.
Moscow describes its action in Ukraine, which began on February 24, as a “special military operation”. The invasion triggered severe economic sanctions against Moscow and the Russian central bank.
The overall Markit index reading rose to 52.1 in February from 49.8 in January, back above the 50 mark that separates expansion from contraction for the first time since September.
Employment fell in the sector for the third month and at the fastest rate since the end of 2020, according to the monthly survey.
But business expectations improved as companies planned to increase investment and hoped customer demand would rise.
“Although aggregate demand remained historically weak, businesses were buoyed by efforts to invest in new product lines as business confidence hit its highest level since last September,” said economist Sian Jones. senior at IHS Markit, which compiles the survey.
“Although private sector companies have been very optimistic about the outlook, the imposed sanctions are expected to hamper the growth potential of the Russian economy.”
Western countries have now imposed a wide range of harsh economic and financial sanctions on Russia after its invasion of Ukraine, sending the ruble to record highs and paving the way for a drop in living standards.
A sister survey earlier this week showed Russian manufacturing activity shrank in February as new orders fell for the first time in six months as businesses felt the impact of the COVID-19 pandemic.
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