2013.09.0402:36:00UTC+00Russia Service Sector Recovers In August

Russia's service sector expanded in August after staying in negative territory over the previous two months, survey data from Markit Economics showed Wednesday.

The latest Purchasing Managers' Index rose to 51.8 from 48.7 in July. But the reading was well below the 12-year historic survey average of 56.2.

Alexander Morozov, Chief Economist (Russia and CIS) at HSBC said he does not expect renewed growth to get much stronger momentum from here. The economist maintains 2 percent GDP growth baseline scenario for the next year.

The volume of incoming new business received by service providers increased in August, but the rate of expansion was little-changed from July's marginal pace. Service providers cut outstanding workloads at a marked pace in August highlighting subdued demand conditions.

Russian service sector employment rose in August, having declined marginally the previous month. The rate of job creation was the strongest since May.

Driven by increased input costs to utilities, inflationary pressures picked up in August. However, the rate of input price inflation remained weak in the context of historic survey data. Pricing power remained weak in both sectors.