The service sector began to expand in Russia

The activity of services in Russia, including metalworking, has been increasing for the second month in a row since April this year. The sector is growing at the fastest pace in 17 months thanks to stronger demand and higher orders, in line with the Purchasing Managers Index (PMI).

The main indicator for the sector, which accounts for about 60 percent of Russia's gross domestic product, rose to 52.8 in May from 50.7 in April. Growth above the 50 mark determines the expansion of the sector.

"While service providers may benefit from partial import substitution among businesses and consumers, the latest data does indicate that underlying domestic economic conditions are gradually improving," said Paul Smith, senior economist at Markit.

Services figures, however, followed Monday's data, which showed that manufacturing activity in Russia fell to a four-month low last month. The rise in the service sector activity in May is associated with new orders, where the growth rates sharply became apparent after February, associated with growing applications for roofing materials and the efficiency of the transportation sector.

The Russian economy is expected to contract in 2015 due to low world oil prices and Western sanctions related to the conflict in Ukraine. According to the latest data from the Ministry of Economy, the gross domestic product contracted by 4.2 percent in April 2015 on an annualized basis.

Russian industrial production fell 4.5 percent in April from the same month in 2014, after falling 0.6 percent in March on an annualized basis, according to data released by Rosstat. The April decline in Russian industrial production was the largest since October 2009.

In the first four months of this year, industrial production fell by 1.5 percent compared to the same period in 2014, Rosstat said. Production is falling despite government efforts to boost local production in many key industries to replace imported goods.

While most sectors have experienced declines, food production has become a bright spot with sweeping food import bans imposed on products from many European manufacturers. Meat production increased 13 percent year-on-year between January and April, while cheese output increased 30 percent over the period.