MOSCOW, (Reuters) – Russia’s services sector saw its activity fall for the second month in a row in October. The decline was caused by low client demand and the contraction in new orders. A survey released Wednesday showed that this is Russia’s first year of such a decrease.

IHS Markit’s Purchasing managers’ index (PMI), which fell from 50.5 in September to 48.8 October, was below the 50 mark that marks expansion and contraction.

Sian Jones, an economist from IHS Markit who compiles the survey said, “A resurgence of virus cases hit the industry further as client demand decreased and new business fell for first time in 2021.”

The fourth quarter saw a slight increase in foreign demand, but it returned to growth by the beginning of the quarter.

In an effort to lower costs, service providers saw a renewed decline in the number of employees. The decline in workforce was only slight, but it was still the second consecutive drop in the past three months.

The inflationary pressures were still evident in October. With higher supplier and utility prices, the rate of rise in input costs reached a 4-month high.

Jones stated that consumers are likely to see a 6.4% increase in consumer prices in 2021. The Bank of Russia hopes their recent 0.75 percent policy rate hike will reduce sharp price increases.

On Monday, a sister survey revealed that Russian manufacturing activity increased in October for first time since May. This was due to faster growth of output but limited by disruptions in supply chains.