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Real retail sales hit 3-year low

Yesterday, Rosstat published the regular monthly statistics pack on economic conditions during February.

Real retail sales growth edged down further to 2.5% YoY, the lowest level since February 2010, from 3.5% YoY in January. Both the food and non-food components of retail sales visibly dragged the headline reading down, with growth moderating to 0.3% YoY (from 0.9% YoY) and to 4.5% YoY (from 5.9% YoY), respectively.

Investment increased 0.3% YoY in February, following a 1.1% YoY increase a month ago. Meanwhile, annual growth in the construction sector slowed from 1.4% to 0.3%.

The unemployment rate decreased 0.2pp to 5.8%, resulting in a marked decline in the SA reading, from 5.4% to 5.2%.

Real and nominal wages grew 5.0% YoY and 12.6% YoY in February, vs. the 5.4% YoY and 12.9% YoY downward revisions a month ago.

The February data from Rosstat painted a sluggish picture, below our and consensus expectations. Although the unfavourable leap-year effect dug into the annual growth pace of the economy (in particular, consumption demand slowed to a 3-year low and IP growth contracted to the deepest level since the crisis), adjusting for this factor shows that the overall picture has also worsened. On a positive and at the same time puzzling note, the SA unemployment rate experienced a downtick, which we see as a one-off. The indicator will likely show an upward trend in the coming months owing to the sluggish economy. We stick to our forecast that an easing cycle will be launched as early as April.
Maxim Oreshkin, Daria Isakova
VTB Capital analyst


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