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. Last Updated: 07/27/2016

Industry Data, Wage Arrears Cool Hopes for Fast Recovery

Industrial output contraction unexpectedly deepened in October, year on year, and wage arrears rose, data showed on Tuesday, signaling that the economy is still far from being on a sure-footed recovery path.

Output shrank 11.2 percent compared with the year-ago period, after a fall of 9.5 percent the previous month and against analysts’ forecasts for a contraction of 8.1 percent.

The data from the State Statistics Service chimes with the manufacturing Purchasing Managers’ Index, which showed the sector slipping back into contraction territory last month after posting its first expansion in more than a year in September.

“We did expect some setback in the recovery. … All in all, the recovery is expected to be very slow and uneven in the industrial sector,” said Annika Lindblad, an economist at Nordea.

“The domestic economy has not recovered properly yet, exports are quite weak.”

In month-on-month terms, industrial output rose 0.8 percent, but this was driven by a seasonal pickup because of the onset of colder weather.

A slump in oil prices, investor flight from emerging markets and the global credit crunch tipped Russia’s once-buoyant economy into recession in the second half of 2008.

Quarter-on-quarter seasonally-adjusted growth returned this year in the July-September period. But the latest data backs officials, including President Dmitry Medvedev, who say it is too soon to call an end to the crisis.

Wage arrears rose for the first time in five months in October, separate data showed on Tuesday.

But both industrial output and wage arrears are faring much better than during the height of the crisis, suggesting that the worst may indeed be over even if the path to recovery will not be a smooth one.