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Russian service sector downturn worsens in December

[MOSCOW] A downturn in Russia's service sector worsened in December, a monthly survey showed on Thursday, providing more evidence that a general economic downturn is persisting.

The headline figure for business activity in Markit's Purchasing Managers' Index (PMI) fell to 47.8 from 49.8 in November, further below the 50 mark that separates expansion from contraction. "Russian service providers end 2015 on a dull note, as the headline figure registered comfortably below the 50.0 no-change mark. This will come as disappointing news to the sector, which looked to be veering towards stability in November," said Samuel Agass, economist at Markit, which compiles the survey.

He added that the decline in business activity had been driven by a fall in new business, in part reflecting payment problems among services firms' customers.

Job cuts in the service sector also continued, having occurred each month since March 2014.

Businesses expected an increase in output next year, although the balance of positive sentiment was slight, with 31 per cent foreseeing an increase and 26 per cent a decline.

The gloomy services reading follows a similar survey for the manufacturing sector, which also showed a deterioration in December.

Russia's economy is expected to contract by around 4 per cent in 2015, with prospects for a recovery next year knocked back by a renewed slide in the price of oil, Russia's main export and an important source of government revenues.