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Output and Demand


Rosstat has published its July statistics pack on economic conditions.

Unemployment decreased to 5.3%, from 5.4% in June, surprising us and the consensus to the upside. More importantly, the seasonally adjusted unemployment rate also eased to 5.5%, from 5.6% a month ago.

Real retail sales growth increased 0.8pp to 4.3% YoY, as both food and nonfood sales intensified.

Investment reached an eight-month high of 2.5% YoY in July, surpassing our and the consensus expectations. It was mainly a reflection of June’s weakness (-3.7% YoY), in our view.

Construction added a heavy 6.1% YoY after the 7.9% YoY contraction a month ago.

Real wage growth edged up 6.6% YoY, from the downwardly revised figure in June (to 5.3% YoY).

Rosstat’s July economic data pack surpassed our and consensus expectations across the board. The strength might have been linked to the favourable calendar factor and sharp negative moves a month ago (mainly in investment, construction and unemployment). Hence, internal demand and the labour market rebounded from June’s lows, while industrial production printed its deepest contraction (WDA) since October 2009. We treat the current positive data set as a one-off and expect milder readings in August.

July data supports on-hold CBR; all eyes on CPI. July’s data pack did not provide unconditional justification for bolder easing (compared with what we had for May and June). However, we believe that if inflation slides below 6.0% YoY by 13 September (the date for the next monetary policy meeting), we shall see the long-awaited and needed cut in policy rates.

Maxim Oreshkin, Daria Isakova
VTB Capital analyst

Rosstat, CBR, CPI

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