January Offers Improvement in Consumption & Drop in Investment
OREANDA-NEWS. February 24, 2010. Rosstat released January statistics indicating growth in retail trade (+0.3% YoY), real wages (+2.6%), and real disposable incomes. Unemployment, however, rose from 8.2% (December) to 9.2%, outpacing the consensus figure of 8.5%. Meanwhile, both construction (-10.6% YoY) and investment (-8.7% YoY) showed evidence of further deterioration, reported the press-centre of OTKRITIE Financial Corporation.
View: The data offers a mixed picture: retail trade figures demonstrate a visible improvement over previous trends and outperformed expectations, suggesting that consumption is bottoming out. This improvement comes on the back of rising real wages (largely due to disinflation) and growth of real disposable income. The big pension increases in December and January was a contributing factor. However, continued deterioration in employment could undermine this improvement in upcoming months.
Meanwhile, news of further deteriorated in investment is disconcerting. We believe that this was driven by a sharp drop in construction. The key question is whether this is a function of the irregularly cold weather, or another dip owing to a lack of state investment and related infrastructure projects. Producers' prices were unexpectedly down 1% YTD in January – proof that industrial recovery is not yet sustainable. That said, we reiterate our major concern that local producers might not be the main beneficiaries of consumption recovery.
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