Russia's industrial output moderated in November to 2.4% year-on-year growth from 3.7% y/y seen in October, Rosstat reported on December 18.

Previously in October and September Russian industry was demonstrating solid numbers, but the October's boost was also supported by low base effect.

The slowdown in November could be attributed to calendar factors too, but the fact that seasonally and adjusted output declined by 0.4% month-on-month versus steady expansion in July-October shows that reasons other than the working day effect were at play too, VTB Capital commented on December 18.

Extraction continued to accelerate in November with mining and quarrying speeding up to 7.8% y/y, from 7.4% y/y in October. 

"While the acceleration that started in June was initially driven by oil extraction, since October products other than oil have been supporting the sector’s performance," VTB notes, in particular pointing to acceleration of coal and natural gas to 8.2% y/y and 3.3% y/y growth, respectively.

Since September’s agreement between Russia and Saudi Arabia, oil extraction has remained stable at 4-4.5% y/y growth and the bank believes that the oil output will keep the same pace until the end of 2018, moderating in the 1Q19 due to recently adopted Opec+ extraction limits. 

In the meantime manufacturing output slowed down, posting 0% y/y growth after the surprising jump to +2.7% y/y in October. 

"Based on the narrow sample of goods that Rosstat provided in the flash industrial output report, the deceleration in November was seen in construction materials and the production of electrical equipment," VTB commented.