Consumption and investment seemed better

Rosstat data released yesterday showed that there was no decline in capital investments in the second quarter, while private demand showed signs of stabilization in July against the background of improved wage dynamics. However, analysts point out that the growth in investment can be explained by one-time statistical effects, and the recorded stabilization of consumption is temporary. Leading data on spending by the population confirms the cooling of consumer demand in August.

According to Rosstat, the rate of decline in real wages in June slowed down to 3.2% in annual terms – after 6.1% in May and 7.2% in April. For the first half of the year as a whole, real wages decreased by 1.3% (for the entire year, the Ministry of Economy expects them to decline by 2.9% after rising by 4.5% in 2021). At the same time, according to Igor Polyakov from CMASF, taking into account the seasonality in June versus May, real wages increased by 3.1%, the average monthly rate of their decline in the second quarter compared to the first was 1.6%. The expert explains the June jump with premium payments and does not see a trend reversal in this.

The increase in real wages was combined with a consistently low unemployment rate (in July it remained at the lowest level for the entire observation period since 1991 at 3.9%) and a revival in lending (consumer and mortgage lending rose by 1% in July after rising by 0, 4% for June month on month). As a result, according to the estimates of the Ministry of Economy, the total turnover of retail trade, paid services to the population and public catering in July slowed down the rate of decline to 6.3% in annual terms against a fall of 6.9% in June. The CMASF estimates that, on a seasonally adjusted basis, overall consumer spending rose 1% in July compared to June, compared to a 0.2% increase in June, mainly due to spending on non-food items. “Consumption has plateaued. This is not growth or even a rebound,” Igor Polyakov notes. Leading data on spending by the population indicate a cooling in consumer demand in August (see Kommersant of August 24). At the same time, the jump in consumer optimism registered by the Central Bank in August “rather reflects a slower decline in the economy and the stability of the labor market, rather than a signal for an increase in demand,” says Dmitry Polevoy from Lokoinvest.

In terms of capital investment, Rosstat statistics confirm that they really did not fall in the second quarter (Deputy Prime Minister Andrey Belousov spoke about this earlier, see Kommersant of August 29). For the full range of organizations in annual terms in April-June, the indicator increased by 4.1%. The Ministry of Economy explains that in terms of industries, processing (mainly due to export-oriented industries: chemistry, metallurgy, oil refining), mining, the transportation and storage sector, as well as construction made the largest contribution to the increase in nominal investments in large and medium-sized organizations. A decrease in the indicator was observed in the field of information and communications.

In the structure of capital investments, investment in intellectual property, buildings and structures grew the fastest against the backdrop of a weak dynamics of investment in machinery and equipment. Obviously, the surge in investment in the second quarter, as well as the jump in consumption, are rather random events. “Instead of abandoning investments, on the contrary, enterprises began to strive to complete investment programs where it could be,” Andrey Belousov explained the reason for the surge. And the CMASF does not exclude that such an effect may be caused by one-time transactions, such as the purchase of Shell gas stations by LUKOIL.

According to the Ministry of Economy, in July, the decline in GDP slowed to 4.3% in annual terms after 4.9% in June and 4% in the second quarter. In July, economic activity was supported by continued growth in mining and agriculture, as well as a significant improvement in construction performance, the ministry explained.

Alexey Shapovalov