Russia’s industrial output performed better than expected in January, rising 2.9% y/y after contracting in both November and December, Rosstat said on February 16.
Mining and quarrying production was up 1.1% y/y and manufacturing output advanced 4.7%. Utilities declined another 2.2% y/y due to warmer weather than in January 2017.
Oil production slid another 1.0% y/y as a result of the OPEC deal, while natural gas output fell 2.2%.
In the mining and quarrying segment, coal and ore production improved. In the manufacturing segment, the output of food, clothing, footwear, wood and paper, and cars also moved higher.
Some construction-related sub-sectors (construction materials and metals) witnessed a turnaround as well.
“However, military-related production likely remained weak given delayed military spending in the budget in recent months. This delay is likely temporary (due to technical issues), so we expect to see a reversal in military expenditures and associated production in the next few months,” Sberbank said in a note.
“The statistics support our view that the weak industrial production figures seen at end 2017 were temporary and suggest that we can expect fairly strong readings in 1Q18. Given the positive sub-segment performance, we expect retail sales and construction to perform well in 1Q18,” Sberbank added.