Russia’s manufacturing sector contracted in July at its steepest pace since the early weeks of the war in Ukraine as business confidence slid to its lowest level in nearly three years, according to a new S&P Global survey reported by Reuters on Friday.

The Purchasing Managers’ Index (PMI) for Russian manufacturing fell to 47.0 in July, down from 47.5 in June. Any reading below 50 signals a decline in activity.

S&P Global noted a “solid decline” in the health of the sector, driven by shrinking demand and worsening financial conditions. New orders fell for the fourth time in five months, while production volumes declined due to challenges in securing financing and receiving payments.

“The reduction in production levels was commonly linked to lower new order inflows and weak demand conditions amid challenges securing finance and receiving payments,” the report said.