Russia's industrial output growth slows further in September

Russia's industrial output growth slows further in September
Russia's industrial output growth slowed in September 2018 to 2.1% year-on-year
By bne IntelliNews October 16, 2018
Russia's industrial output growth continued to slow down in September 2018 to 2.1% year-on-year from 2.7% seen in August and 3.9% in July, the latest data by Rosstat statistics agency shows. The industrial growth for 3Q18 slowed to 2.9% y/y from 3.2% in 2Q18, amounting to 3% y/y in January-September 2018.

The growth in September was largely supported by expanding extraction. "Significant improvements can be seen in the output of crude oil, which expanded on the decision by Russia and Saudi Arabia to increase volumes in September-December," VTB Capital commented on October 16.

Mining and quarrying output growth accelerated to 6.9% y/y, driven by faster growth in oil production that increased to 4.9% y/y.

At the same time manufacturing output shrank by 0.1% y/y in September compared with 2.2% y/y growth the month before, showing negative dynamics for the first time since December 2017. Manufacturing was still up 2.2% y/y in 3Q18 and 3.3% y/y in January-September. 

Sberbank CIB attributed the decline in manufacturing to calendar (September has one fewer working day) and high base effect, as manufacturing output rose 5.6% y/y last year. VTB also attributed negative manufacturing dynamics to calendar effects. 

"We think the y/y dynamics of manufacturing and industrial production in general will improve in 4Q18, supported by a low-base effect (industrial production shrank 1.6% y/y in 4Q17)," Sberbank forecasts.

UralSib Capital also expects a "notable improvement in the manufacturing dynamics" in the coming months, but conditions it by the US Congress not passing tougher sanctions against Russia after November.
 

 

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