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Russia: Unemployment is falling

Tue, Oct 20 2009, 13:57 GMT
by Lars Rasmussen

Danske Bank A/S


Russian Federal Statistics Service (RFSS) released a raft of data today regarding the latest developments in the labour market and private spending. It was notable that unemployment has fallen to a ten-month-low of 7.6% from a peak above 10%. The unemployment data is backed by a recent survey that showed that Russian companies are starting to hire again. However, the RFSS recently adjusted their calculating procedures regarding unemployment data, and this blurs the picture somewhat.

We acknowledge that the Russian economy is gradually improving – according to the Russian Economy Ministry Q3 GDP added 0.6%. However final demand remains weak and is expected to remain so in the coming months. While the number of unemployed fell more than 200,000 during September, real wage growth is negative and real disposable income also declined – although at a slower pace than recently seen.

September retail sales supports the perception that domestic demand is still weak, but recovering. Retail sales (in constant prices) rose for the fourth consecutive month (+0.3% m/m in September). However, in year-on-year terms retail sales is still down 9.9%. We expect a further gradual improvement of household demand, but the 2010 outlook is challenged by the fiscal outlook, which will support growth to a less extent than in 2009.

Overall we expect the Russian economy to continue to gradually improve, especially if oil prices remain buoyant. We look for slightly positive GDP growth of 1.5% y/y for 2010.

Published on  Tue, Oct 20 2009, 14:01 GMT

Danske Bank  | Holmens Kanal 2-12, DK-1092 Copenhagen
http://www.danskebank.com/ | danskeresearch@danskebank.com

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