Russian industrial production unexpectedly expanded in March for the first time this year, growing at the fastest pace in eight months on gains in manufacturing and mining.
Output at factories, mines and utilities rose 2.6 percent from a year earlier after shrinking the previous two months, the Federal Statistics Service in Moscow said in an e-mailed statement today. The figure exceeded the highest projection in a Bloomberg survey of 19 economists, which had a median estimate of a 1 percent decline.
The upturn bucks the trend of recent data showing the economy of the world’s biggest energy exporter expanding at the slowest pace since a recession in 2009. With the government heightening calls for monetary stimulus to revive domestic demand, Bank Rossii under outgoing Chairman Sergey Ignatiev this month took the biggest step toward easing monetary policy since raising all rates in September.
“The release is a rather robust reading, which can give the central bank some reasons not to cut rates next month,” Vladimir Osakovskiy, chief economist for Russia at Bank of America Merrill Lynch, said in an e-mail. Still, “so far it is hard to see it as a reversal of the trend.”
The ruble has weakened about 2.2 percent against the dollar in the past month, its second month of decline and the worst performance among more than 20 emerging-market currencies tracked by Bloomberg in that period. The ruble lost 0.8 percent to 31.3320 per dollar as of 5:35 p.m. in Moscow.
Manufacturing grew 3.4 percent in March from a year earlier and mining increased 0.6 percent, according to the report. Production of electricity, water and heat expanded 1.1 percent, the statistics office said.
“The extractive sector has started to recover, which isn’t a bad signal in general and for our country in particular, considering the role it plays in our economy,” President Vladimir Putin told Prime Minister Dmitry Medvedev at a meeting broadcast on state television today.
A “moderate market recovery” at the start of the year means OAO Severstal, Russia’s second-largest steelmaker, will have a better first quarter compared with the last three months of 2012, Chief Financial Officer Alexey Kulichenko said in a phone interview on March 29.
Output was probably supported by colder-than-expected weather boosting gas consumption in Europe which raised OAO Gazprom’s export deliveries last month, suggesting the increase may not be sustained, Osakovskiy said.
Still, industrial output was unchanged in the first quarter from a year earlier. The Economy Ministry last week cut its estimate for industrial-output growth this year to 2 percent from 3.6 percent and reduced its investment-expansion forecast to 4.6 percent from 6.5 percent.
High interest rates and a “very strong decline” in the estimate for natural gas exports are the main reasons for a lower growth forecast for this year, Economy Minister Andrei Belousov told reporters April 12.
“The March data will unlikely be sustained, with industrial production growth most likely stabilizing in 1-2 percent year-on-year growth range,” Alexander Morozov, chief economist for Russia at HSBC Holdings Plc in Moscow, said by e-mail.