(Bloomberg) -- Russia's private sector suffered “substantial declines” in activity last month as the impact of sanctions over the invasion of Ukraine and the plunge in the ruble triggered the sharpest drop in operating conditions since the Covid-19 lockdowns in 2020, according to S&P Global.
The Russia Composite PMI index fell to 37.7 in March from 50.8 in the previous month, S&P said in a survey published Tuesday, with both services and manufacturing companies reporting sharp declines.
The Russia Services Business Activity Index declined to 38.1 from 50.8 in February, falling below the 50 mark that separates contraction from growth. That was the lowest reading since the pandemic in 2020 and lower than forecast in a Bloomberg survey of five analysts, whose median estimate was for 46.
Last week, S&P said Russia's Manufacturing PMI fell to 44.1 from 48.6, citing contraction in output and new orders as panelists reported “challenging demand conditions.”
What Bloomberg Economics Says...
“The PMIs point to a broad-based contraction in activity that may only be getting started. Soaring prices, snarled supply chains, blocked exports and stalled credit are likely to drive a deep and prolonged recession.”
Both service and manufacturing companies reported the sharpest increases in prices ever seen in the survey, while employment contracted sharply as backlogs of work fell along with the outlook for future business.
Russia's economy is falling into what could be the longest recession in its modern history after the U.S. and Europe imposed tough financial sanctions over the invasion of Ukraine. The Bank of Russia raised the key rate to 20% to fight accelerating inflation and imposed capital control to stem the ruble's drop.
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With assistance from Bloomberg
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