According to the results of May, a historical maximum of consumer demand was recorded

Fresh statistics from Rosstat allows us to record historical highs in consumer demand, demand for labor with minimal unemployment. However, such growth is found against the backdrop of declining real wages and increasing imbalances in favor of those employed in the military sector and workers in the military industries, the Center for Macroeconomic Analysis and Short-Term Forecasting notes.

According to Rosstat (.pdf), consumer activity in May 2023 continued to grow rapidly, including after statisticians raised estimates of retail turnover (by 0.3 percentage points, p.p.) and catering (by 1.5 p.p.) from beginning of the year, based on data from quarterly surveys of small enterprises and “changes made by respondents to previously reported data”. As a result, the retail trade turnover in May turned out to be 9.3% higher than the level of May 2022 (according to the Ministry of Economy, the seasonally adjusted indicator increased by 1.8% over the month against 1.3% in April), and catering – by 22. 4% respectively. Data on the dynamics of services has also been revised – by 1.4 percentage points up for 2022, and from the beginning of 2023 – by 1.6 percentage points down.

However, real consumer demand in the sector continues to grow rapidly – in May by 5.2% in annual terms and by 0.5% per month, seasonally adjusted (in April – by 0.2%), the Ministry of Economy estimated.

As a result, according to the Ministry’s calculations, total consumer demand (retail, catering and services) in May was 8.8% higher than in May 2022 (up 7.3% in April) and 1.8% higher thanks to services and catering level May 2021. In January-May 2023, demand already exceeded the corresponding level by 0.7%, while in the first quarter it was 3.9% lower than last year. Igor Polyakov from the Center for Macroeconomic Analysis and Short-Term Forecasting (CMASF) received similar estimates: if in January-April the total consumer demand was 1% lower than the corresponding period in 2022, then in January-May it exceeded it by 1%. According to the analyst, such a volume of the indicator is a historical maximum – and if before March the main factors of its growth were services and catering, then since March pent-up demand for non-food products, including cars and electronics, began to be actively satisfied.

There are quite a few reasons for such a rapid growth in consumer demand. Among them, for example, a decrease in consumption abroad – by 7% in the first quarter of 2023 in annual terms, a rapid increase in the credit activity of the population (see “Kommersant” dated June 26) and consumer sentiment, which continued in June (see “Kommersant” dated June 27), and also, Mr. Polyakov notes, significant payments to the military and citizens from the state and a growing shortage of skilled workers against the backdrop of record low unemployment (in May, another historical low – 3.2% of the workforce).

The Ministry of Economy predicts a 5.3% growth in retail sales in 2023, believing that the recovery in demand will be facilitated by the growth of wages and incomes of the population.

According to Rosstat, the annual growth rate of real wages in April reached (thanks to a low base in 2022 and declining inflation) 10.4% year-on-year after rising 2.7% in March 2023, and both real wages and pensions (for excluding emissions) are in line with the 2020 monthly averages. The CMASF also estimated that in April by March, seasonally adjusted, real wages sank by 0.4% against the background of the fact that in the first quarter of 2023 it showed an average monthly stagnation of minus 0.1%.

The Ministry of Economy expects real wages to grow by 5.4% in 2023, that is, a noticeable improvement in their dynamics from 4.2% in January-April 2023. The CMASF is convinced that the pressure on the labor market will increase (in May, according to the center, the demand for jobs was also at the level of a historical maximum – 75.4 million people), as well as for salaries, but disproportionately. “The growth is associated with the development of military production,” concludes Igor Polyakov.

Artem Chugunov