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March - unexpected strength


Yesterday, Rosstat published its regular monthly statistics pack on economic conditions during March.

Real retail sales growth increased to 4.4% YoY from February’s (revised upward) 3.0% YoY. The recent acceleration was mainly on the uptick in food sales growth (which might be technical owing to fruit price deflation). Meanwhile, a pick-up in the growth of non-food sales (to 5.7% YoY from 4.8% YoY) was also supportive for the headline reading.

Investment declined 0.8% YoY in March, following a 0.3% YoY increase a month ago. Meanwhile, annual growth in the construction sector slowed from 0.3% to 0.2%.

The unemployment rate decreased a further 0.1pp to 5.7%, resulting in a decline in the SA reading, from 5.3% to 5.2%.

Real and nominal wages grew 4.2% YoY and 11.5% YoY in March, vs. 3.3% YoY and 10.8% YoY a month ago (figures which themselves had been revised downward).

The rebound evident in March’s economic statistics was expected after the exceptionally weak February; however, the data released yesterday by Rosstat was, with the exception of investments, well above our and consensus expectations. We treat the current positive data set as a one-off and expect to see milder readings, as we still see no reason for a recovery of the pace of economic growth.

March’s statistical report (together with accelerating daily inflation in early April) might provide the CBR with an excuse to postpone cuts in repo rates until June. 

Maxim Oreshkin, Daria Isakova
VTB Capital analyst

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