Russian Industry Has Probably Made an Effort to Break Away from Stagnation

A detailed analysis of indices of business surveys of the Gaidar Institute showed that in November Russian industry made probably an effort to break away from stagnation.


However, higher intensity of growth in production and optimization of output plans was supported only by estimates of reserves of finished products and not the demand. Utilization of the pricing factor for promotion of the demand is hindered by intense growth in costs at the end of the year.


In November, the dynamics of growth on industrial products did not undergo substantial changes as compared to October as regards both the initial data and the data cleared of the seasonal factor. As a result, from the second half-year growth rates of sales reduction (after clearing of the seasonal factor) remained in the range of –9 points to –6 points and turned out to be somewhat better than the results of the respective months of the previous year. However, the demand kept falling.


The latter fact accounted for quite a large share of "below the norm answers" which only yields a little to the share of positive estimates of sales in the 4th quarter of 2013. Sales forecasts kept losing optimism during all the months of 2013 (except for May) and fell in November to –17 points though in January surged up to +28 points. Formal methods of clearing of a seasonal factor bring the results of expectations of the last few months to the "positive" area, however, the trend is an unstable and downward one.


Estimates of the reserves of finished products of the past few months form a positive impetus on the output of Russian industry. After a surge of the balance up to +21 points in July, the index fell to +6 points by November; it is to be noted that the main losses of redundancy took place in November. However, expansion of the output only under the effect of estimates of reserves of finished products without adequate changes in the dynamics of the demand creates grounds for next growth in their balance and subsequent slowdown of production.


In November, the data of surveys on industrial output dynamics showed some positive changes in the index. The initial balance (growth rates) rose by 2 points, while that cleared of a seasonal factor, by 3 points. Such a positive change in the surveys' data may result in a breaking of the extended stagnation of output for a month because so far it is not supported by similar trends in the dynamics of sales.


S.V. Tsukhlo, PhD (Economics), Head of the Business Surveys Department