Russian service sector nears stagnation as new order growth weakens, PMI shows

(Reuters) - Russia's service sector lost further momentum in March, with business activity growing at its shallowest rate in nine months as new order growth eased and employment contracted, a business survey showed on Thursday.

The S&P Global Purchasing Managers' Index for Russian services fell to 50.1 in March from 50.5 in February, indicating only a tiny expansion in output. Readings above 50 signal growth in activity, while below that indicates contraction.

New business in the sector continued to rise but at the slowest pace since last July, as some firms reported reduced purchasing power among customers.

Firms' workforce numbers declined in March at the quickest pace since January 2023, ending a 19-month sequence of expansion, S&P Global said.

"Anecdotal evidence suggested that the drop in staffing levels was due to the non-replacement of voluntary leavers," S&P Global said.

Despite the overall slowdown, business confidence remained historically high, reaching its strongest level since May 2024. Service providers expressed optimism about future output, supported by plans to expand service lines and expectations of improved demand conditions.

A sister survey published on Tuesday showed that Russia's manufacturing sector experienced its sharpest contraction in nearly three years in March due to weak domestic and foreign demand.

(Reporting by Alexander Marrow; Editing by Hugh Lawson)