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Industrial production remained at 2%YoY in September


According to Rosstat, industrial production growth slid a bit to 2.0% YoY in September, from 2.1% in August. This is slightly below the consensus forecasts of 2.3% (BBG) and 2.6% YoY (Interfax), but fully in line with our expectations. SA industrial production increased 0.7% MoM.

The detailed breakdown reveals softer growth in manufacturing (3.3% YoY vs. 4.1% YoY in the previous month), despite strong performances from the steel (+9.7% YoY vs. +3.3% YoY) and pipes sectors (+7.8% YoY vs -2.7% YoY). Meanwhile, mining advanced to 1.8% YoY (from 0.8% YoY) on the back of improved gas production (+2.6% YoY vs -2.8%). The growth in utilities kept moderating and dived into negative territory to -0.9% YoY (vs 0.2% YoY in August). 

IP reading last month mainly driven by technical factors and recovery in gas export/production. The significantly negative calendar factor(September contained 20 working days in 2012, two less than in 2011) dragged theindustrial production index down last month. However, the low base effect from 2011(especially for metals) was supportive. Among key growth drivers are gas production(which recovered from the weak summer period), steel and steel pipes. Thus, it lookslike the external demand for Russian goods has improved after the poor dynamics inrecent months. At the same time, manufacturing growth fell to its weakest level sinceMarch 2012 (and the second lowest since October 2009), confirming our view offading internal demand momentum.

CBR to decide based on September’s statistical report and inflation data. The IP report was slightly weak, but is unlikely to impact on the CBR’s mood. September’s statistical report is likely to be published on Thursday and the next weekly inflation release is on Wednesday (at 13.00, London time). If there are no big negative surprises in the demand data and the headline CPI continues to add as it did in early October (i.e. near 0.2% WoW) the CBR is likely to hike all key rates 25bp as early as in November. 

Maxim Oreshkin, Daria Isakova
VTB Capital analyst

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