National Economic Trends PTI: Unemployment topical in Russia again, says poll

National Economic Trends

PTI: Unemployment topical in Russia again, says poll

Moscow, March 22 (Itar-Tass) Unemployment is once again topical in Russia, with the share of people who discuss this issue with their family members, friends and colleagues rising from 47 per cent in December 2009 to 51 per cent in February 2010, a poll study said.

The number of people preferring not to discuss unemployment increased from 16 per cent to 11 per cent, and the number of those who did not care about unemployment was unchanged, 31-33 per cent, the Russian Public Opinion Study Center (VTsIOM) said.

In fact, the share of Russians who know a lot of unemployed people has been steadily declining through recent months. The indicator reached its maximum, 26 per cent, in April 2009, and went down to 17 per cent in February.

However, the prospect of losing one's job still frightens Russians, VTsIOM said.

Moscow Times: Unemployment Falls to 8.6%, Even as Economy Backtracks

Combined Reports

The number of people out of work in Russia fell by nearly 400,000 last month, but the economy contracted as investment continued to fall and growth in retail sales and disposable incomes was very slow, data showed Friday.

The data further cements expectations for another interest rate cut from the Central Bank this month as it seeks to spur lending to help Russia recover from its first recession in a decade.

Seasonally adjusted gross domestic product fell 0.9 percent in February, erasing most of January's gains, Economic Development Minister Elvira Nabiullina told reporters.

"It shows that the factors that were supposed to stimulate the economy are not fully working yet," she said, adding that the data confirmed the unstable nature of Russia's recovery.

On the bright side was a 2.9 percent year-on-year rise in real wages — their best performance in 15 months, the State Statistics Service said. Unemployment also eased to 8.6 percent from January's 10-month peak of 9.2 percent.

The median estimate of 12 economists in a Bloomberg survey was for a gain to 9.3 percent.

But some 200,000 Russians were still owed wages on March 1, according to the statistics service. Wage arrears totaled 4.12 billion rubles ($139.9 million) in February, unchanged from the month before.

The manufacturing industry accounted for the highest level of wage arrears, or 2.088 billion rubles of the total, the service said.

Pension increases, rising wages and increased confidence helped consumer spending recover this year. Thirty-nine million people, or 27 percent of Russia's population, receive a pension, and the government approved increases of 46 percent this year, according to VTB Capital.

(Reuters, Bloomberg)

Bne: Russian economic recovery slows further, as the economy contracts in February

http://www.businessneweurope.eu/dispatch_text11379

Unicredit, Russia

Topic: Most monthly Russian economic indicators were weaker than expected in February, as the Ministry of Economic Development estimated that real GDP contracted 0.9% mom in seasonally adjusted terms for the first time since June 2009.

Our view: A fresh set of monthly indicators showed the persistent weakness of domestic demand in the Russian economy. Investment demand led the trend, falling 7.4% yoy even despite the strong low base effect of the 16.9% yoy drop in February 2009. Sectors exposed to domestic investment demand also suffered, with construction contracting by 9.8% yoy on top of a 20.7% yoy drop in February 2009.

Consumer demand was also weaker than expected, with real wages and disposable incomes both weaker than expected. Disposable incomes slowed to 2.4% yoy growth, down from a revised 15.9% yoy jump in January, as real wages rose 2.9% yoy (consensus 3.9% yoy, Uni- Credit 3.5% yoy), driven more by slowing inflation than resumption of nominal growth. As a result, retail sales rose by much weaker than expected 1.3% yoy (vs. consensus expectations of 4.3% yoy, UniCredit 2.5% yoy), despite the considerable low base effect. We note that the latter figure was in line with data leaked earlier last week.

To some extent, the weak data could be attributed to unusually cold weather during the month, which we believe could have constrained investment activity and retail sales. However, we think that such weather effects are likely to be limited, given the lack of any major snow- or weather-induced shutdowns during the month.

Overall, given weak data on both investment and consumer demand, we believe the weakerthan- expected industrial output number released last week was a genuine slowdown, rather than a consequence of methodology changes. Goods shipments in February also slowed to 9.3% yoy growth, down from 12.2% yoy in January, even though the low base effect was stronger due to 18.1% yoy drop back in February 2009.

On the positive side, the unemployment rate unexpectedly fell to 8.6% of the labor force (consensus 9.3%, UCG 9.5%), down from 9.2% in January, which we see as the only positive data point in the monthly release.

Based on the weaker-than-expected economic data, the Ministry of Economic Development estimated that real GDP in February fell by 0.9% mom in seasonally adjusted terms, the first decline since June 2009. We note that this monthly figure represents only an estimate, as statistical data are available only on a quarterly basis. However, we agree that the economic recovery seems to have slowed considerably in February, and note that this slowdown could prevent a substantial acceleration in yoy terms in real GDP in 1Q10. We also note that the weakness supports our rather conservative outlook for 2.7% real GDP growth in 2010.

Conclusion: The weaker-than-expected economic data calls for further easing of monetary policy and a much weaker RUB. We expect at least a 50bps rate cut in the near future and further efforts by the CBR, such as FX and verbal interventions, in an attempt to stem the RUB rally. Signs of a slowing economy could also undermine investor optimism towards Russian markets in general.