Sad slides – Newspaper Kommersant No. 163 (7364) of 09/06/2022

Macroeconomic statistics for July showed economic growth for the first time after four months of landslide decline in March-June 2022. According to the Ministry of Economy, we recall that the decline in GDP in July slowed to 4.3% from 4.9% in June year on year. However, already in August, the positive correction of GDP dynamics stopped, according to leading indicators. Most citizens continue to refuse expensive purchases and the purchase of durable goods.

Although, according to most leading indicators, the situation in industry (more precisely, in processing) improved in August (see Kommersant of August 26), the dynamics of services, according to PMI S & P Global, deteriorated markedly. The industry index slipped from 54.7 in July to 49.9 in August. Composite PMI (industry plus services) against this background fell from 52.2 to 50.4 points. “Optimism (July.— “b”), rather, is due to the fact that reality turned out to be better than expected in February-March,” the authors of the Solid Numbers Telegram channel note.

According to analysts of the MMI Telegram channel, GDP growth in July compared to June could be 0.5-0.7% seasonally adjusted, and the annual dynamics could be minus 4% against minus 4.9% in June. If the Ministry of Economy in its current macro review described the factors that “supported economic activity” in July (see “Kommersant” dated September 1), Raiffeisenbank analysts estimated that the main negative contribution to GDP dynamics in July came from trade: despite a certain slowdown decline in retail, the drawdown of wholesale trade increased in July – to minus 25.4% from 18.3% in June. This, in part, can be explained by a noticeable improvement in the state of inventories in the industry – including due to parallel imports (see Kommersant of August 29 and September 2). “In addition to reduced domestic demand, falling foreign trade volumes can lead to a weakening, both against the backdrop of sanctions restrictions and due to falling volumes of gas supplies to the EU in June-July,” the bank’s economists explain. They conclude that the improvement in the economy in July does not look sustainable, it was supported by temporary factors. Economists of the MMI Telegram channel notice that the jump in construction (it and the growth of military orders are responsible for the rebound in GDP in July) is associated with the base effect: for example, in June 2021, construction growth was 12.1% in annual terms, and in July it fell to 4.1%.

The dynamics of consumer demand, which showed signs of stabilization in July, also noticeably worsened in August and in the first week of September (see Kommersant of August 24 and 25). According to the Sber Index, from August 29 to September 4, nominal spending on goods and services increased by 5.4% in annual terms against 7.5% and 8% in the previous two weeks. The fall in annual indicators in commodity markets accelerated to 3.4% – primarily due to purchases of non-food products, this is below the May lows (3.1% in mid-May). The authors of the MMI Telegram channel estimate the dynamics of retail trade in August at minus 9-9.5% against minus 8.8%, minus 9.6% and minus 10.1% in the previous three weeks – and factors for the activation of consumer demand in September do not see.

At the same time, according to a study by the Romir panel from August 22 to 28, in cities with a population of more than 10 thousand people, the most popular way to alleviate economic hardship for citizens was the refusal of expensive purchases and durable goods. “From the second place in the previous week, this pattern moved to the first. The share of Russians saving on expensive purchases has increased from 45% to 56%,” the authors conclude. In the reporting week, the number of Russians who save on food and essential goods has decreased (18% in the 34th week against 26% in the 33rd). Among those who alleviate economic hardship by reducing spending on food and essentials, 62% switched to discounted and promotional items. At the same time, in the last week of August, the Romir economic confidence index (which assesses the current situation and expectations of respondents from the same sample) showed a slight increase for the first time since the end of July (the indicators of the Central Bank and Rosstat behaved similarly). “Among those who have television as a source of information, the index was plus seven points. Among those who receive information from YouTube, the index was minus 10 points,” the authors of the study conclude.

Alexey Shapovalov