Industrial output decreased by 10.8%y/y in July, beating the consensus forecast of a 14.1% decrease. The headline figure was boosted by a significant slowdown in rate of the contraction in the minining industry to 1.6%y/y from 4.0% in June and in manufacturing from 16.0% to 14.7%. In contrast, electricity output growth deteriorated to -9.0%y/y in July from -7.9%% in June.
Our view
July headline IP data supports the view that the recession hit the nadir in April-May-09. Higher global commodity prices and tentative signs o recovery in major developed economies bodes well for Russia's export industries. The figure also represents a good start to this week. Weaker-than-expected 2Q09 GDP adversely affected market sentiment last week and the danger was that a continuation of poor data would further undermine sentiment. That said, we would still add the caveat that the risks in the remaining data releases this week are evenly balanced. The figures Rosstat are scheduled to publish are unemployment, real wages, investment in productive capacity, retail sales and real disposable income. Nevertheless, July IP seems to lent market sentiment some support for the moment.