MOSCOW, Sept 3 (Reuters) - Russia's service sector returned to growth after 10 months of contraction in August, with both activity and new business rising for the first time in nearly a year, the VTB Capital Purchasing Managers Index showed on Thursday.
The headline PMI climbed to 52.2 in August from 48.5 in July, moving above the 50 mark that separates expansion from contraction for the first time since September 2008.
An overall improvement in service sector activity was slowed by employment that continued to fall due to "a challenging market environment", though the rate of job losses was the slowest in 10 months.
"Meanwhile, we expect the expansion of new orders will support the headcount increase in the sector to match the robust growth of demand," said Svetlana Aslanova, analyst at VTB.
"Prices charged and input price inflation accelerated in August; however, both indicators are still below their long-run averages".
"In the meantime, companies' profitability improved, mainly as a result of new incoming business," she added. (Reporting by Olga Borodina; Editing by Andy Bruce)