Euro 2008 Puts Brakes On Output

The country's industrial output rose in June at the slowest pace in 5 1/2 years as workers focused on the national football team's progression through Euro 2008 and production of locomotives, cement and oil fell.

The annual rate dropped to 0.9 percent from 6.7 percent in May, the State Statistics Service said. That was the slowest rate of growth since the service began calculating data under new methodology in 2003. The median forecast of 22 economists was for 6 percent growth. Production was down 1.4 percent from May.

A drop in orders for locomotives as well as the comparative effect of a 9.6 percent growth rate in June 2007, means that the slowdown is temporary, rather than a worry for the economy, analysts said. Productivity also suffered as millions celebrated the national team's performance in Europe's most prestigious football tournament, where Russia unexpectedly progressed to the semifinals.

Of the five games Russia played in the month, three occurred on workdays, including the team's loss June 26 to Spain, which went on to win the tournament.

"It's force majeure, like the deep frosts we saw in 2006," said Yevgeny Nadorshin a senior economist at Trust Investment Bank. "If you are completely drunk at 2 a.m., it's very hard to do anything useful in the morning. If the games were shown at 8 p.m. and not 10:45 p.m., it would have been reflected in better economic figures."