Russian Consumer Demand Stagnates as Unemployment Tops Forecasts

  • Joblessness grew for first time in four months amid recession
  • Households bearing brunt of economic crisis after crash in oil

Russian consumer spending showed little sign of picking up in March as unemployment jumped to the highest in more than three years.

The jobless rate rose for the first time in four months, climbing to 6 percent from 5.8 percent in February, the Federal Statistics Service in Moscow said on Tuesday. The median of 14 estimates in a Bloomberg survey was for an increase to 5.9 percent. Retail sales fell 5.8 percent from a year earlier after a revised 4.3 percent drop, while real wages slipped 3 percent. That was worse than the median forecasts compiled by Bloomberg.

“Consumption will likely remain depressed thanks to elevated inflation, rising unemployment and low income growth,” Otkritie Capital economists said in a research note before the data release.

Households are enduring the brunt of Russia’s longest recession in two decades after authorities responded to the collapse in crude prices with spending cutbacks and allowed the ruble to weaken. While poverty has risen to the highest in a decade, President Vladimir Putin said last week that he won’t pump cash into the economy to stoke growth.

Even so, a seven-month letup in inflation and a stabilizing exchange rate are boosting sentiment after oil’s crash crippled the Russian currency. A gauge of consumer confidence compiled by the state-run polling company VTsIOM rose to 31 in March from 29 in February, according to a report on Tuesday.

The ruble has appreciated more than 12 percent against the dollar this year after a 20 percent loss in 2015. It traded 0.7 percent stronger at 65.65 against the U.S. currency as of 3:38 p.m. in Moscow. The 10-stock Micex Consumer Goods & Services Index has retreated 2.7 percent this year, while the broader Micex Index is up 9.2 percent.

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