No time to consume – Newspaper Kommersant No. 205 (7406) dated 07.11.

The macroeconomic report of Rosstat for September and the third quarter of 2022 allows us to observe the first signs of the impact of partial mobilization and related migration on incomes of citizens and the labor market. Statistics record a sharp increase in the decline in consumption of citizens with a decrease in their registered income and an increase in shadow income. September also saw a decrease in the number of employees and vacancies. Experts expect these trends to strengthen and the economy to decline in the near future.

Real incomes of citizens (before taxes and interest payments) in the third quarter in annual terms fell by 2.4% against a fall of 1.9% in the second quarter of 2022, Rosstat said. The main reasons are the reduction of the wage fund and payments for hired labor, income from property, with a noticeable decrease in social transfers (see table). “Enterprises did not fire employees, but they could not index salaries either,” explains Igor Polyakov from the CMASF. A positive contribution to the dynamics of real incomes in the third quarter was made only by entrepreneurship (due to the restoration of services and catering) and other incomes (as Kommersant already wrote, due to the departure of wages into the shadows, the expansion of the informal sector and increased migration, which could serve underestimation of income, says Mr. Polyakov).

The situation with real disposable income (after compulsory payments) worsened even more. Year on year, the indicator decreased by 3.4% in the third quarter against a decrease of 0.8% in the second. “Russians were the richest in 2013. After four years in a row, there was a collapse in income – a total of 8.4%. In 2018–2019, they were weakly recovering, which was interrupted by the covid. This year we are returning to the minimum levels again. There will be less and less money in the budget for social support in the near future, ”analysts of the MMI Telegram channel state.

Seasonally adjusted in the third quarter to the second real disposable income also fell – by 0.7% after rising 1% earlier. In August, nominal wages also shrank, and the decrease in real wages, seasonally adjusted for the month, amounted to 0.4% after a decrease of 0.5% in July, estimated at the CMASF (in annual terms, its decline slowed to 1.2% from 3.2% respectively). Nominal wages grew the most in Russian Railways (by 26% and 22% year-on-year for passenger and freight traffic), printing (by 23%) and agriculture (by 22%), the authors of the Solid Numbers Telegram channel note. The nominal salaries of teachers, for example, rose by 2%.

After a revival in July-August, private demand fell sharply in September. Year-on-year retail trade turnover fell by 9.8% against a decline of 8.8% in August, the increase in services decreased to 0.6% against 3.5%, catering increased to 3.3% against 1.3%. The average monthly expenses of citizens, taking into account seasonality, in the third quarter grew by 0.5%, but already in September they decreased by 0.5%, the CMASF estimated. The reversal was recorded in goods, the consumption of which in September compared to August contracted seasonally by 0.9%.

The share of consumption in the third quarter fell to 78.2% of revenue, which is less than in the covid 2020-2021. The savings rate (the ratio of the increase in savings to disposable income) jumped to a historical maximum for this quarter of 7.6% (against the usual slightly less than 1%, in the crisis years – about 5%). “The population has switched to a crisis consumption model, which will lead to weak demand in the coming quarters, and possibly even years. This effect is reinforced by the consequences of mobilization/emigration,” the authors of the MMI Telegram channel note. The described trends will only intensify in the near future, including due to the beginning of an increase in unemployment, which, according to the ILO methodology, amounted to 3.9% in September against 3.8% in August. In September alone, the number of people employed in the economy decreased by 600 thousand people, and the supply of vacancies decreased by 18.3%, according to the Rabota.ru website, and by 11%, according to HeadHunter, estimated at CMASF.

According to the Ministry of Economy, in September, GDP growth accelerated on a monthly basis to 2.1% seasonally adjusted against 1.8% in August. The ministry notes that such dynamics of the economy is close to the forecast and by the end of 2022 will be minus 2.9%. Analysts at Raiffeisenbank also believe that in the fourth quarter, the recession may deepen to 4% qoq, seasonally adjusted, which corresponds to a contraction of the economy by 3.5% for the year.

Artem Chugunov