Russia’s March 2022 services PMI stood at 38.1 points, down sharply from February’s reading of 52.1 points, S&P Global research reported.

“The latest data show a marked decline in business activity in Russia’s services sector, contrasting with the modest expansion seen in the previous period,” the release said.

The composite output index, which tracks activity in both manufacturing and services in Russia, stood at 37.7 points in March, down from 50.8 points in February.

“The drop in manufacturing was the sharpest since the COVID-19 pandemic began nearly two years ago. Where lower activity was reported, companies attributed this to the impact of higher selling prices on demand and geopolitical uncertainty,” the survey said.

Indexes above 50 points indicate an increase in business activity, and below that level – its decline.

March results recorded a significant drop in new orders from companies in the sector. The decline was the fastest since May 2020. Survey participants attributed the low volume of orders to increased economic uncertainty, which had a strong impact on consumer demand.

At the same time, new export orders resumed falling. Demand from foreign customers fell severely and at the sharpest pace since April 2020.

Cost burdens rose in March. The rate of purchase price inflation accelerated markedly from February and was the sharpest on record. High costs were attributed to soaring supplier prices and unfavorable exchange rates.

Adjusting for record cost inflation, companies raised product prices at the fastest pace since the series began in October 2001.

Weak customer demand forced companies to lay off employees in March. The pace of job cuts accelerated to the fastest since June 2020.

The decline in the number of workers reflected easing capacity pressures at the end of the first quarter. The number of unfilled orders continued to fall at the fastest pace in nearly two years.

Service companies’ confidence about the outlook for production over the next 12 months turned negative in March. Representatives of the Russian service sector signaled a marked change in sentiment. Where firms were pessimistic, this was often linked to greater economic and geopolitical uncertainty.