Russian Services Sector Slows In July

Russian service industries expanded in August at the slowest pace in seven months as companies received fewer new orders and hired fewer workers, according to the latest survey from VTB Bank Europe. The Purchasing Managers' Index of growth in services dropped back to 55.4 from 58.3 in July. This was the steepest monthly decline since the survey began in 2001, and in conjunction with the manufacturing PMI published earlier in the week gives a clear indication that the Russian economy is slowing.



Russian economic growth is expected to slow to around 7.5 percent in 2008 - down from 8.1 percent last year - as the higher cost of credit and slowing wage growth take the momentum out of the country's consumer boom. The number may be lower at the end of the day depending on how rapidly the economy slows.


Real wages rose at an annual 11.6 percent rate in July, compared with an 11.7 percent one in June, according to the Russian statistics office. Disposable income advanced an annual 7 percent in real terms in July.