(Reuters) - Russia's services sector activity shrank in March at the fastest rate since May 2020 when the COVID-19 pandemic hit, due to a slump in client demand and new orders, a business survey showed on Tuesday, with those surveyed citing "greater economic and geopolitical uncertainty".
The S&P Global (NYSE:SPGI) purchasing managers' index (PMI) slid to 38.1 in March from 52.1 the previous month, sliding well below the 50 mark that separates expansion from contraction.
Inflationary pressure intensified in March. Firms in the services sector registered a series-record rise in output charges, and the rate of cost inflation also reached its highest since the survey began in October 2001.
The companies that took part in the monthly survey also reported a drop in domestic and foreign customer demand, while employment levels fell at their sharpest pace since June 2020.
"Reduced staffing numbers also reflected subdued business confidence, as expectations regarding the year-ahead outlook slumped to their lowest in two years," S&P Global said in the PMI report.
Output expectations across the Russian service sector fell as firms expected to see a decline in activity in the coming year, the survey showed.
"Pessimism reportedly stemmed from greater economic and geopolitical uncertainty," the PMI report said.
The survey did not mention Russia sending tens of thousands of troops into Ukraine on Feb. 24 or the wide-reaching economic sanctions imposed on Moscow after that.
A sister survey showed last week that Russian manufacturing activity also shrank in March at its fastest pace since the early stages of the COVID-19 pandemic in May 2020.