Russian services sector returns to growth in Sept -PMI

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 rose 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 pace that accelerated notably from August,” S&P Global said in a statement. “The decline was often attributed to the impact of sanctions on business operations.”

    New export orders fell further from August levels and while new business increased, it did so at the slowest pace in the current four-month sequence of expansion.

    Employment also fell, at its fastest pace since May.

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

    Concerns regarding economic and political uncertainty weighed on sentiment, S&P said, though business confidence ticked higher on hopes of increased client demand.

    A sister survey earlier this week showed that 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 registered six months of contraction that began in February, when Russia sent tens of thousands of troops into Ukraine, triggering unprecedented Western sanctions on Moscow.

(Reporting by Alexander Marrow; Editing by Susan Fenton)