Rosstat assessed the dynamics of industrial production in September 2023

Intra-annual industrial output, according to Rosstat, continues to fluctuate around stagnation, although its year-on-year growth rate remains high due to statistical effects. Analysts’ assessments of the intra-annual dynamics and structure of industrial activity differ markedly. Companies hope for a quick increase in demand while current output contracts.

In September, the annual growth rate of industrial production accelerated to 5.6% (Interfax consensus forecast – 5.5%) from 5.4% in August 2023. In January-September 2023, output increased by 3.3%, with the Ministry of Economy forecasting 3.6% for the year. In September, growth in processing accelerated – to 10.9% from 10.3% in August, while in mining the decline slowed to 0.7% from 1.2%, respectively. Annual comparisons are traditionally heavily distorted by the base effect and lag behind the characterization of current trends. By Rosstat calculationsthe intra-annual dynamics of output, taking into account seasonality and the calendar, practically does not change; in the third quarter, the average monthly growth rate of output is near zero – in September compared to August – plus 0.3% after decreasing by the same amount in August compared to July 2023.

The results of such measurements are highly dependent on the method and approach of the analysts. The Center for Macroeconomic Analysis and Short-Term Forecasting (CMACF) uses a smaller sample of industrial production (due to the high volatility of individual insignificant industries). They see rapid growth in output in September compared to August – plus 1.4% versus minus 0.1% a month ago, against the backdrop of renewed growth in production (by 1.2%, the center notes that this is an estimate – Rosstat does not publish production data) and a noticeable increase in processing (by 1.9%), mainly in metal structures, but only the output of metallurgy and paper production decreased.

According to earlier estimates by center analysts, two-thirds of the growth in industrial production in recent months is explained by direct and indirect needs of the military-industrial complex, the rest is an increase in private consumption.

According to the center’s expert Vladimir Salnikov, there are “objective difficulties” taking into account the dynamics of investment industries, which, according to TsMAKP, taking into account seasonality, increased output in September by 14% compared to August 2023 – there are problems with the application of Rosstat’s deflation method to the constantly changing and not fully understandable nomenclature and “superficial import substitution” (suppliers often pass off imported equipment as their own product).

On the contrary, according to analysts Telegram– channel “Hard Figures”, in September, taking into account seasonality, the industry contracted by 0.9% after a decline of 0.5% in August, and growth in September was observed only in processing (0.2%). “This is basically (a decline for two months in a row.— “Kommersant”) is due to a reduction in production and production of other vehicles – volatility in the latter began to have a greater impact on the production index,” the authors explain and expect that “taking into account the growing spending on national defense next year from 6.4 trillion to 10.8 trillion rubles. The slowdown is likely to be temporary.”

Vladimir Salnikov, in turn, foresees “a slow cooling of growth (in processing and the consumer sector.— “Kommersant”) after the impulse of the Northern Military District against the backdrop of depletion of capacity and personnel, and then everything will depend on overcoming transport and foreign trade restrictions.”

Let us recall that in October the Central Bank recorded a noticeable deterioration in estimates of current output volumes and demand in industry (especially in mining and processing, aimed at private consumption) with rising expectations. October surveys of industrialists by the Gaidar Institute also record a rapid increase in the optimism of companies due to the positive dynamics of demand (according to the Central Bank, this was observed only in the production of investment goods). An increase in demand estimates and a decrease in production plans was noted along with a decrease in the shortage of finished goods inventories (see “Kommersant” dated October 23).

Artem Chugunov