This December, Russia’s manufacturing industry shrank at the fastest pace since March 2022, according to a report published by S&P Global on Monday, cited by Portfolio.

The Purchasing Managers’ Index (PMI) fell to 48.1 points in December from 48.3 points in November. A reading below 50 points indicates contraction in the sector, while a reading above 50 indicates growth.

Production has been falling for 10 consecutive months, and the rate of decline in December reached its highest level since spring 2022. Companies cited weak demand and a decline in orders as the main reasons.

New orders have also been falling for seven consecutive months, although the pace of decline slowed somewhat in December.

The decline in demand is due to uncertainty and deteriorating purchasing power among customers. Employment has also continued to decline in December at the fastest pace since September, with job losses in three of the past four months.

Manufacturers attributed the job cuts to lower production needs.

Meanwhile, inflation in raw material prices jumped to its highest level since March, forcing manufacturers to raise prices despite subdued demand.

Confidence among sector players has weakened further as well, with optimism about future production falling to its lowest level since May 2022.

All of this puts added pressure on Moscow to reach a peace agreement in Ukraine, which, after the talks this past weekend between Zelensky and Trump, reportedly looks close.