February’s service PMI data signalled a faster rise in business activity across the Russian service sector, March 5 report by IHS Markit showed. Service providers recorded a three-month high upturn in output amid a sharp increase in new business. 

The services sector fared better than the manufacturing sector that failed to pick up any momentum in February. 
While the IHS Market manufacturing PMI fell to a five-month low of 50.1 in February, and just above the 50.0 no-change mark, the Russia Services Business Activity Index posted 55.3 in February, up from 54.9 in January. 

"The latest expansion in business activity was strong overall and the quickest since last November," Markit commented, noting that "anecdotal evidence suggested the rise was due to the acquisition of new clients and more favourable demand conditions across the service sector."

Panellists among the service providers also stated that stronger client demand drove the latest expansion. New business from abroad also increased for the fifth successive month in February. 

As a result, the Composite Output Index (accounting for both services and manufacturing) registered 54.1 in February, up from 53.6 in January.

"At the composite level, hiring activity quickened to the strongest since May 2011 as panellists signalled a robust degree of confidence in the year-ahead outlook," Markit economist Sian Jones commented on February report.

The degree of optimism among the service providers was one of the strongest over the past seven-and-a-half years, with the business expectations towards the year ahead picking up, according to Markit.

The recent hike in VAT continued to impact upon cost pressures across the Russian service sector in February, with the rate of input price inflation easing from January, but remaining elevated and posting the second-fastest rise since December 2014. Higher fuel and raw material costs were also flagged by panellists as driving the increase in cost burdens.