(Reuters) – Business activity in Russia’s services sector grew at a slower pace in September amid a weaker rise in demand, a business survey showed on Thursday, with firms also moderating their hiring efforts.

The S&P Global Purchasing Managers’ Index for Russian services fell to 50.5 in September from 52.3 in August, indicating only a fractional rise in output. Any reading above 50 signals growth, while below 50 indicates contraction.

Inflationary pressures led companies to pass on higher costs to customers, producing a historically strong increase in selling prices, S&P Global said in a statement.

The pace of job creation eased to its weakest since February, the survey showed, and new orders increased for the third consecutive month but at a slower pace than in August.

“Anecdotal evidence noted that despite demand increasing on average, there were instances of a slowdown in client activity,” S&P Global said.

The survey also highlighted signs of spare capacity, with backlogs of work decreasing for the sixth month in a row. Despite this, the degree of confidence in future activity rose to its highest since May.

“Despite the uptick in demand conditions losing momentum, planned investment in advertising and hopes of greater new orders spurred business confidence,” S&P Global said.

A sister survey published on Tuesday showed that activity in Russia’s manufacturing sector contracted for the first time in more than two years in September, driven by declines in output levels, new orders and employment.

(Reporting by Alexander Marrow; Editing by Toby Chopra)