OREANDA-NEWS. September 21, 2010. Following the release of unexpectedly strong industrial production data for August, Rosstat published its monthly report, in which all sectors of the economy except agriculture demonstrated robust performances, reported the press-centre of OTKRITIE Financial Corporation.

Most surprising was the 17.5% MoM jump in fixed investment, which brought its annualized growth rate up from 0.8% YoY (July 2010) to 10.9%. Construction volumes also rose substantially, increasing 3.4% YoY in August against a decline of 2.5% YoY in July. The consumer sector exhibited further strength with real disposable incomes growing by 7.9% YoY (+6.2% YoY in July), while the unemployment rate dipped to 6.9% (7% in July) Retail sales growth stood at 6.5% YoY (+6.6% YoY in July).

View: The unexpected hike in investment volumes is most likely related to the increased activity of the state or state-owned companies (defense, pipelines, etc.), as last month we did not witness any major change in investment trends in the private sector. The news is certainly positive, as it supports our view of the ongoing recovery in the economy. The fall in agricultural output (-19.1% YoY in August) was hardly surprising given the summer heat wave and multiple reports of declining harvest volumes. This could drag the 3Q10 GDP growth rate down below 4% YoY, in our view. However, robust consumer demand and a gradual pick-up in investment should push economic growth back to an annualized rate above 4% YoY for FY10.