Industrial Producers Fall Back Into Slump
- By Alex Nicholson
- Sep. 16 2009 00:00
Industrial production declined last month, ending two months of improvement, as carmakers suspended production after the sharpest economic contraction on record slashed demand, the State Statistics Service said Tuesday.
Output slumped an annual 12.6 percent in August and fell a nonseasonally adjusted 3 percent from July. Production fell an annual 10.8 percent in July and gained a monthly 4.7 percent. The median estimate in a Bloomberg survey of 16 economists was for an annual contraction of 10.9 percent.
The economy contracted a record 10.9 percent last quarter after demand for raw materials and heavy industrial goods, including steel, slumped. AvtoVAZ, Ford and KamAZ shut production temporarily during August after a slump in sales.
Car output plunged 84.9 percent year on year and was down 68.6 percent compared with the previous month, the statistics service said. Truck production dropped 33 percent in the month.
Automakers cut their forecast for Russian sales to 1.4 million new cars and light commercial vehicles this year after August sales tumbled 54 percent, the Association of European Businesses said Sept. 8.
Mining and quarrying fell a monthly 0.8 percent compared with July. Manufacturing dropped 4.3 percent in the month.
The decline highlighted the obstacles Russia faces as it struggles to return to growth. Finance Minister Alexei Kudrin said earlier this month that the economy may be emerging from recession this quarter amid signs of resurgent demand in parts of Asia and Europe. Some indicators support his prediction.
New orders and output in manufacturing grew simultaneously in August, VTB Capital’s Purchasing Managers’ Index showed on Sept. 1. The gauge shrank at the slowest pace in 11 months, VTB said.
“Certain positive signals have made themselves felt in recent months, both from global markets and the domestic economy,” Prime Minister Vladimir Putin said last week. “Starting in June, industrial production has grown about 1 percent a month. Prices for our exports are holding at quite a high, acceptable level.”
Russia has boosted spending to battle the slump, though the measures will swell the budget deficit to 8.9 percent of gross domestic product this year, according to the Finance Ministry. The economy may contract 8.5 percent in 2009 on average, the government estimates.
Wage arrears fell in August by 14.2 percent, to 5.56 billion rubles ($180 million) after declining 9.9 percent in the previous month, the statistics service said. The unemployment rate was unchanged in July at 8.3 percent of the work force.
The Central Bank cut its main interest rates by a quarter point, effective from Tuesday, marking a sixth rate reduction since April 24. Policy-makers are trying to ease corporate lending flows to help manufacturers weather the crisis.