Russian service sector shows robust improvement in June

Data from June reflected a robust improvement of operating conditions in the Russian service sector, according to London-based VTB Bank Europe's survey of the Russian service sector released Wednesday.

The seasonally adjusted headline Russian Services Purchasing Managers Index (PMI) index rose to 56.9 in June from 56.4 in May, VTB Bank Europe said.

Readings above 50.0 signal an increase on the previous month while readings below 50.0 signal a contraction.

"The Russian Services PMI resumed growing in June, indicating greater expansion of the sector," said Svetlana Aslanova, senior corporate analyst at VTB Bank Europe Research.

"Strong economic conditions and robust improvement in new orders volumes supported the increase in business activity and the further rise in employment.
Business confidence boosted as the majority of respondents expect robust market demand in the next 12 months.
However, the indicator of backlogs slid for the sixth consecutive month showing the sharpest reduction in the survey history.
The increase of staff pay and renting prices were among the major reasons for growth of input prices.
Meanwhile output price inflation also increased as current conditions allowed service providers to pass on costs to consumers," she said.

A further expansion of workforce levels in the Russian service sector was recorded in June, VTB Bank Europe said.
Staff recruitment reflected efforts by firms to meet the demands of higher levels of new business at their units and the launch of new projects, the bank said.

Average input costs rose at a sharp and accelerated pace in June, which firms generally attributed to increased staff pay, the bank said.
The strongest rate of input cost inflation was recorded in the transport and storage sector, the bank said.

VTB Bank Europe was previously known as Moscow Narodny Bank (MNB).

October 2001 was the first month when data was collected for the survey.