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. Last Updated: 07/27/2016

Output Shrinks 13.2% in February

Russian industrial output posted the second-fastest contraction in the series' seven-year history in February, but the pace of the slowdown eased a little from January, State Statistics Service data showed on Monday.

Output fell 13.2 percent year on year last month after shrinking by a record 16 percent in January, the statistics service said. Analysts had forecast a 15 percent contraction in February output.

"In itself, the [Russian] number is very bad and very big, but it is better than expected," said Yulia Tseplyayeva, chief economist for Russia and CIS at Merrill Lynch.

"But it is too soon to cheer, because in manufacturing, the slowdown is much deeper than we expected. Such a serious contraction talks of a sharp slowdown in demand."

Manufacturing output shrank 18.3 percent compared with last year, with falls of 6 percent in extraction of raw materials and of 5.7 percent in production of electricity and gas.

Within manufacturing, trucks, cars, buses and tractors also saw production more than halved compared with last year as lack of credit has dried up demand and forced companies to idle plants and cut working weeks.

Cement output was down by one-third, reflecting trouble in the construction sector.

In month-on-month terms, manufacturing rose 19.7 percent, possibly reflecting a greater number of business days compared to public holiday-filled January.

In the short term, some analysts said the slight slowdown in industrial output contraction could have been helped by an unexpected rise in month-on-month producer prices, the first in half a year.

Nonetheless, prospects for the rest of the year remain glum.

Rail freight shipments, a broad indicator of economic activity, fell 26 percent to 27 percent in early March compared with a year ago, broadly in line with the previous month's performance, Deputy Transportation Minister Andrei Nedosekov said on Monday. The slowdown in shipments eased to 24.2 percent in February, year on year, from 33.1 percent in January.

For the year as a whole, the Economic Development Ministry forecasts a 5.7 percent contraction in industrial output.