Weakening demand becomes a routine for the Russian industry

Analysis of the system of indicators of Gaidar Institute’s business surveys shows that adverse changes to the demand dynamics have become regular for the Russian industry which is currently maintaining a nearly zero growth in output, reducing prices, controlling successfully finished goods stock, and having hopes for sales increase this year. 


For instance, the demand for industrial products saw drastic adverse changes late in 2013. The basic data showed the lowest rate of sales in December 2013 for the last five years. It was only in the post-crisis 2008 when the demand weakened even more intensively in December. The December fall in the demand, as seasonally adjusted, was the worst over the last 1.5 years. However, such a dynamics of sales has become regular for the Russian industry. Over the last five months in 2013 the basic rate (balance) of changes to the demand slid from 0 down to -22 p.p., a zero growth in sales gave way to a substantial fall. The share of “normal” answers in assessing its volumes over the same period dropped from 54% to 47%, i.e. merely 7 p.p. The share of “below normal” answers increased merely to 51% by December 2013. As a result, the balance of scores of sales volumes reached merely -4 p.p. 


Instead, forecasts of the demand by the end of the year show an unusual growth on both the basic and seasonally adjusted data. In the previous post-crisis periods the balance of anticipated changes to sales in December either kept declining or remained at the level reached in November. Now the initial balance has increased 4 p.p. while the seasonally adjusted balance raised 3 p.p. As a result, this indicator manages to keep positive values (at least after seasonal adjustment) and save the industry from more drastic adverse changes to the output. 


The balance of scores of finished goods stock in H2 2013 was distinguished by a marked sustainability and showed +12 p.p. or less. The industrial sector managed to more o less successfully achieve balance between production volumes and the demand for its products after its indicator shot up in June, when surplus stock reached the post-crisis highest. However, final balances of scores of assessed stock in H2 2013 differ largely. The biggest surplus stock was reported in the light industry (+30) and construction industry (+21). The machine-building industry assessed its stock with a balance of +10 p.p. The smallest surplus stock were reported in the non-ferrous industry and chemical industry (+7 p.p. each), food industry (+5 p.p.), and forest industry (+1 p.p.). Ferrous metallurgy enterprises were found to even run short of stock (-3 p.p.).


Balances of enterprises’ investment plans show post-crisis lowest for the five consecutive months. An average of merely 18% of the industrial enterprises reported in August-December 2013 on their intention to increase investment in their own production as compared with the corresponding months of the previous year; the share of answers about reduced investment averaged 32% to reach 35% I n November 2013. A major share of the enterprises (42% on average) were ready to maintain the previous volumes of investment. 


Tsukhlo S. V., Ph.D. in Economics, Head of Business Surveys Laboratory