MOSCOW, (Reuters) – Russia’s services sector suffered a decline for the third month straight in December. The volume of orders fell and business confidence dropped to its lowest in nearly a decade, according to a survey.

Although the Markit purchasing manager index (PMI), for services increased to 49.5 in November from 47.1 in November, it remained under the 50 threshold that distinguishes expansion and contraction.

Sian Jones (senior economist, survey compiler IHS Markit) stated that the sector was particularly affected by COVID-19 limitations, especially in consumer-facing sectors.

According to the survey, there was an increase in staff numbers due to insufficient demand, both from home and abroad.

The service industry saw rising costs, due to higher input prices, unfavorable exchange rates and increased fuel and salary costs, as well as increasing subcontractor fees.

While the degree of confidence in service companies has fallen to its lowest level since October 2020, it was not without hope for recovery in client demand.

Jones stated that the headwinds for Russian private sector companies will be substantial going into 2022 as rising inflation, increasing COVID-19 case numbers, and weakening demand pose a threat to the near-term outlook.