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MOSCOW, April 5 (Reuters) - Activity in Russia's service sector expanded at its fastest past in more than 2-1/2 years in March, a business survey showed on Wednesday, as new export orders rose for the first time in over a year and new orders increased sharply. The S&P Global Purchasing Managers' Index (PMI) for Russian services jumped to 58.1 in March from 53.1 a month earlier, far above the 50 mark which separates expansion from contraction. The sector has been under intense pressure since Russia sent tens of thousands of troops into Ukraine in February 2022 in what it calls a "special military operation", but is now showing signs of improvement, with output growth at its quickest since August 2020. "Stronger client demand, successful advertising campaigns and greater customer referrals were all noted as key factors driving the latest rise," S&P Global said in a statement.
Crucially, new export business, an area that has particularly suffered as Western firms have shunned Russia, returned to growth for the first time since February 2022.
"Anecdotal evidence suggested that greater demand from a range of export markets spurred growth," S&P Global said. A mobilisation drive announced last September, which saw more than 300,000 men drafted to the armed forces and led hundreds of thousands to flee abroad to avoid being conscripted, has sapped consumer confidence and hampered the services sector in recent months. Since February output has increased and firms have resumed hiring, and survey respondents were bullish about future activity, although confidence slipped from February's high as firms raised concerns regarding high inflation. "Optimism reportedly stemmed from hopes of an improvement in demand conditions and planned investment in facilities expansion and product development," S&P Global said. A sister survey on Monday showed that activity across Russia's manufacturing sector expanded for the 11th month running in March, driven by production rising at its fastest rate this year and future output expectations growing sharply. (Reporting by Alexander Marrow; Editing by Hugh Lawson)
