The industry starts with a positive

Market surveys of industrialists conducted by the Gaidar Institute in January 2023 recorded an increase in actual demand in this sector and a slight decrease in the shortage of qualified personnel, which had previously increased due to mobilization. Against this background, the plans and forecasts of companies reached their maximum levels since February 2022, and inflation expectations showed the most significant growth since last year’s March jump.

The results of measurements by the Gaidar Institute (IEP) of actual indicators in industry (as of January 19) and forecasts (as of January 26) revealed a relatively positive start to the year in this sector. The index of industrial optimism by January 2023 reached a level that is only one point behind the best (September) value of the previous year.

The main reason for this is the positive dynamics of demand. The balance of actual sales after the October dip by 15 points in November 2022 – January 2023 increased by 20 points and turned out to be the best value in the last 11 months. The decrease in the share of “normal” estimates of January demand volumes to 56% and the increase in the share of estimates of “below the norm” to 36% indicate that companies were hoping for better sales at the beginning of the year. At the same time, demand forecasts have not actually changed since September, being at a level “insufficient to enter the trajectory of statistically distinguishable industrial growth,” the IEP notes.

The growth in demand for industrial products, which is primarily associated with an increase in military orders (in January, based on Sberindex data, it is, however, noticeable on the part of individuals and can be explained by the realization of pent-up demand amid the devaluation of the ruble), helped companies increase production plans and move from a policy of minimizing stocks of finished products to the formation of their non-crisis surplus.

Against this background, in January, inflation expectations of the industry, according to the IEP, showed the most significant increase since March 2022 – by 13 points. Such a surge is unlikely to be explained by an expected improvement in sales and reflects the current devaluation of the ruble that began at the end of 2022. “Rising costs will continue to put pressure on prices, which may maintain this trend despite the established conservatism of consumption,” Raiffeisenbank analysts say, commenting on inflation data for the penultimate week of January. “Consumer demand remains rather sluggish, putting pressure on core inflation. However, we do not rule out an acceleration in price growth rates in the coming months of the year in the face of increased budget spending and the weakening of the ruble,” Sberbank CIB analysts say.

The second assessment after the announcement of partial mobilization by enterprises of their provision with qualified personnel showed a decrease in the tension of the situation. At the same time, the 28% share of companies with a shortage of workers (at the peak in October 2022 there were 33%) is still above the level of January 2022. “A slight decline in the optimism of hiring plans in January did not fundamentally change the picture of personnel problems in the sector: the shortage of skilled workers, which reached an all-time high in October, is forcing enterprises to maintain high demand for labor,” the authors of the study record (see chart). The current balance of these plans is noticeably higher than the values ​​of 2010-2019.

Artem Chugunov