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Macro data – labour statistics improved in May


Rosstat has released the main data package for May, which significantly revised the record low nominal wage growth for April of 1.0% YoY to 5.2% YoY. There was even more good news on the labour front in May, as nominal wages climbed 7.3% YoY and recovered to -7.3% YoY in real terms (from -9.6% in April). This better pay has meant a slight spillover into retail sales, which edged higher to -9.2% YoY after the -9.6% in April. The improvement is due to higher purchases of non-food goods. At the same time, food sales are flat at -8.8% YoY after the -8.7% YoY a month earlier.

Overall the data supports a more upbeat outlook for the labour market, with nominal wages growing in both the private sector (6.5% YoY) and, to a lesser extent, in the public sector (4.4% YoY). The unemployment rate, while edging lower to 5.6%, actually increased to 5.8% SA after adjusting for the seasonal increase in the demand for labour. While the recovery in real wage growth is symptomatic of lowering pressure from the demand side on inflation, the balance is still disinflationary as consumers face tight credit conditions and wage growth reflects profit sharing in select tradables sectors. There was a negative surprise in May from investment demand, as FAI is falling faster than expected at -7.6% YoY (BBGe:-6.3%) and manufacturing IP printed -8.3% YoY as the supply side adjusts to lower demand in construction, light industries and select food items.

Policy-wise, the report might provide further reason for the CBR to slow the pace of rate cuts to 50bp at the next meeting, but is not sufficient to tip the Board of Directors into skipping the cut altogether.

Alexander Isakov, Petr Grishin
VTB Capital analysts

Russia, Rosstat

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