VEB and statistics diverged in their assessments of the situation in the industry


Russian industry in March decreased compared to February by 0.6%, which was a major factor in the declining economy last month by 0.4% from economic survey of Vnesheconombank in March. In February, according to the VEB, the economy grew by 0.3% month-on-month (with clearance from the seasonality factor and impact of a leap year).

“March has shown that until about the turn of the economic dynamics in the direction of growth to speak prematurely,” writes the review’s chief economist VEB Andrei Klepach.

This VEB assessment of the condition of Russian industry were more pessimistic than the official statistics of Rosstat, published earlier this month. Rosstat has positively evaluated the dynamics of the March: according to the calculations of the state authorities, in March the industry has grown in comparison with February by 0.4%.

Discrepancies with the official statistics of Rosstat Andrei Klepach explains, in particular, the “extra” day in February: “the Greatest uncertainty, including due to the leap-year originated with the evaluation of industrial dynamics”, — stated in the review.

Klepac writes that the decline of industry in March, primarily dictated by the deteriorating situation in the manufacturing sector: it was reduced, according to the VEB, by 1.1%. “Fell off the production of most engineering products, where exceptions is the development of turbines. Continuing at a steady negative trend in the production of building materials”, — quotes the examples Klepach. A significant decline was recorded in sectors serving investment demand. Overall, investment demand in March declined by 0.7%, says the chief economist of the Bank.

Consumer demand also showed no improvements, according to a review of the Bank. For the month retail sales fell by 1.4%, and the turnover of paid services — by 0.7%. However, said Klepach, the situation with incomes of the population gradually improves, which may eventually impact on the dynamics of demand. Real disposable incomes (incomes less obligatory payments and adjusted for inflation) rose in March by 0.5% and real wages increased by 0.2%. The latter figure continues to grow for the last four months. The trend may not be sustainable, as the situation on the labour market in March began to deteriorate, warns Klepach. Unemployment (seasonal clearance) rose from 5.3% to 5.7% last month, recovering at the last quarter of last year.

The deterioration of the situation in the industry also record the experts of the Center for market research HSE. The business confidence index in March decreased by 1 percentage points to minus 6. This index reflects both the current data on demand and stocks of finished products and the forecast output. On the one hand, in March there was a growth in the average level of capacity utilization in the industry. On the other, the situation on the labor market in industry has continued to deteriorate, also decreased the coverage of its own financial resources. In addition, dropped the expectations of entrepreneurs in terms of production and demand at the horizon of 3-4 months. In April, assessment of business climate has not significantly changed.

“April of the assessment of managers about the state business climate led by large and medium industrial enterprises basically repeated values of the last month with a slight background improvement”, — noted the experts of the HSE, in its report for April 2016. This month the index of business confidence rose to minus 5. More positive was the situation only in the manufacturing industry: HSE notes, in particular, improved estimates of the entrepreneurs of the current and expected employment situation and a slight improvement in the assessment of the situation with their own financial resources and profit.