The crisis is over! Well, sort of. The Russian shopping footfall index accelerated once again in the 44^th week of the year as consumer confidence gathers momentum and the hoi polloi go shopping thanks to a slew of improving (but still far from ideal) macroeconomic indicators, according to the Watcom Shopping index. 

The Moscow-based Watcom index is the most immediate and direct measure of retail activity in Russia as it measures the number of shoppers and their spend in real time using 3D camera technology.

The index in the last week before November was up again, continuing a recovery that has been running all summer, rising from 516 in the 36^th week to the current 532 in the 44^th week, its highest level since the 10^th week of 581 that coincides with the shopping binge around Russia’s Old New Year (under the Julian calendar), one of the biggest family holidays in the year.

Watcom chairman Roman Skorokhodov said: The interesting thing is that this is for the 6th time this year that Shopping Index in 2016 exceeds the numbers of 2014.”

The growth can be explained by the population getting used to the crisis and their return to the big shopping centers, which have been investing into their appeal by provide deals and entertainment, among other things.

“As a result, traffic at big centers has grown by 15% since the beginning of the year 2016. Many shopping centers have gone through a re-branding, trying to better need the needs of the consumer,” says Skorokhodov.

That said the retail sector is not yet back in the black, but the trend is clearly positive. Rosstat’s data for September showed a big uptick in nominal wage growth to 9.4% y/y and a material upward revision of the estimate for August, which was revised up from 5.8% to 9.7% this month. Even better news was a revision upwards of real wage growth to 2.8% -- the first time real wage growth as been in the black for months.

The fly in the ointment is real disposable incomes are still falling, albeit less slowly. Real disposable incomes contracted by 5.8% in the first eight months of 2016 and took a sharper dive in August (the most recent data), tumbling by 8.3% vs -7.3% a month earlier. However, the impressive jump in real wages means the real disposable income number is likely to have recovered significantly in September. On the back of on going fiscal consolidation, the slowest wage growth was in the public sector, which affects about half the population: in public administration, nominal wages increased by only 2%, while in education and health they increased by 4% and 5%, respectively in September, way below the average increase of 8%.

The acceleration in wage growth visibly helped the recovery in retail sales, which contracted by -3.6% y/y in September from -5.1% y/y in August, having crashed by over 15% at the end of 2015. Analysts say that consumption is clearly recovering and expect retail sales to go back into the black around the end of this year.