Russian Investment Falls More Than Forecast as Joblessness Rises

Russian investment fell more than economists estimated and unemployment rose to a six-month high as rising incomes helped shield consumer demand in October.

Fixed-capital investment shrank for a third month, falling 1.9 percent from a year earlier after a 1.6 percent drop in September, with the jobless rate growing to 5.5 percent, the Federal Statistics Service in Moscow said today in an e-mailed statement. Economists forecast unemployment at 5.4 percent and saw a 1 percent contraction in investment, according to the median estimates in two Bloomberg surveys. Retail sales grew 3.5 percent from year earlier as real wages jumped 4.1 percent.

The world’s biggest energy exporter is struggling against crosscurrents that have kept the economy from overcoming the worst slowdown since a 2009 slump. Consumer spending, which accounts for about half of the economy, is showing resilience as investment weakens, with industrial production unexpectedly contracting 0.1 percent in October from a year earlier.

“The entire economy should become friendly toward projects with a lengthy return on investment,” central bank Chairman Elvira Nabiullina told lawmakers in Moscow today, adding that growth of 1.5 percent to 2 percent is becoming the “new norm” for Russia. “This isn’t a short-term cyclical slowdown, caused by the intensifying crisis on global markets. The slowdown is structural in character, linked to the exhaustion of the potential for a recovery.”

The Micex Index of 50 stocks retreated 0.3 percent to 1,506.16 at 6:02 p.m. in Moscow. The ruble depreciated 0.3 percent to 32.8370 against the dollar.

Wages, Incomes

Real disposable incomes surged 4.9 percent in October after a revised 0.8 percent decline in the previous month, topping the median estimate of seven economists in a Bloomberg survey was for a 2 percent increase. Growth in retail sales exceeded economist projections both on an annual and monthly basis.

“The positive retail sales reading is counterbalanced by a negative surprise in industrial output data,” Tatiana Orlova, senior economist at Royal Bank of Scotland Group Plc in London, said by e-mail. “Paradoxically, the retail sales could be boosted by expectations of further ruble devaluation following the ruble weakening this summer. The population doesn’t like to hold on to a cheapening ruble.”

Gross domestic product grew less than estimated in the third quarter, expanding 1.2 percent from a year earlier, the same pace as in the previous three months.

Shrinking Share

Russia will see its share of global GDP eroded over the next two decades as the economy expands more slowly than the world average, according to Economy Minister Alexei Ulyukayev. Growth this year may miss the government’s 1.8 percent forecast by as much as 0.3 percentage point, Ulyukayev said Nov. 13.

Persistent growth in consumer spending, the main driver of economic growth is “the main guarantee that Russia will not slip into recession,” Vladimir Osakovskiy, chief economist for Russia at Bank of America Merrill Lynch in Moscow, said by e-mail before today’s data release. “The financial health of the Russian consumer remains relatively robust as strong real wage growth suggests.”

To contact the reporter on this story: Olga Tanas in Moscow at otanas@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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