Russia's service sector returns to growth in September - S&P

A general view shows the skyscrapers of the Moscow International Business Centre during sunrise in Moscow.

MOSCOW Reuters -- Russia's service sector returned to growth in September, a business survey showed on Wednesday, buoyed by an increase in domestic demand, but with sanctions against Moscow continuing to restrict overseas orders.

The S&P Global Purchasing Managers' Index PMI for Russian services went to 51.1 in September, moving back above the 50 mark, which separates contraction from expansion, after slipping below that level in August to 49.9.

Foreign customer demand decreased at a sharp rate that accelerated notably from August, S&P Global said in a statement. The impact of sanctions on business operations was attributed to the decline. New export orders fell further from August levels, while new business increased at the slowest pace in the current four-month period of expansion.

Employment dropped at its fastest pace since May.

It was not clear how heavily President Vladimir Putin's partial mobilization order, made on Sept. 21, had weighed on workforce numbers. Hundreds of thousands of men have been drafted into the army or fled abroad since then.

S&P said business confidence went higher on hopes of increased client demand, despite concerns regarding economic and political uncertainty.

A sister survey earlier this week showed Russian factory activity grew at its fastest rate in 3 -- 1 2 years in September, though Western sanctions continued to weigh on export business.

The manufacturing sector experienced six months of contraction beginning in February, when Russia sent tens of thousands of troops into Ukraine, triggering unprecedented Western sanctions on Moscow.