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IP growth edged up to 1.9% in November on strong momentum in manufacturing sector


According to Rosstat, industrial production growth rose to 1.9% YoY in November from 1.8% YoY in October. This is in line with the consensus forecasts of 1.9% (BBG), but more upbeat than our expectations. SA industrial production increased 0.6% MoM.

The detailed breakdown reveals accelerated growth in manufacturing (4.0% YoY vs. 3.0% YoY in the previous month), on the back of a strong performance across the board: iron (+5.1% YoY vs. -1.1% YoY), cars (+15.7% YoY vs +11.3% YoY), gasoline (+10.0% YoY vs +4.2% YoY), and the construction sectors. At the same time, mining slid to 0.3% YoY (from 2.1% YoY) on the back of the continuing decline in gas production (-4.6% YoY vs -4.3% YoY). Growth in utilities remained in negative for the third month in a row, dropping 2.6% YoY (vs -0.6% YoY in October). 

Though the contraction in gas and electricity production (due to warm weather) dragged the IP increase down, growth in manufacturing industries rebounded across the board. External and internal demand gained momentum with stronger growth in the output of metals and oil processing goods as well as cars and construction-related materials. This month, cold weather implies a bounce back in the electricity and mining sectors, but unlikely strong dynamics in manufacturing to persist. In our view, IP growth will be hovering near the 2.0% YoY mark near term, as demand is set to be under pressure from the tight fiscal stance and the slowdown in bank lending.

From the CBR’s perspective, the recent uptick in IP growth implies more grounds for keeping the ‘wait-and-see’ stance for now and not to urgently help economy growth. Therefore, we reiterate our view that policymakers will start the easing cycle in late-1Q13/early-2Q13. 

Maxim Oreshkin, Daria Isakova
VTB Capital analyst

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