Russian Wages Plunge More Than Forecast as Consumer Demand ReelsAaron Eglitis
Russian real wages shrank the most since 1999 and retail sales fell for a second month, faring worse than forecast by analysts and underscoring the toll that a weaker ruble and falling oil prices are exacting on the economy.
Wages adjusted for inflation plunged 9.9 percent in February after a revised 8.4 percent decrease a month earlier, the Federal Statistics Service in Moscow said Thursday in a statement. The median estimate of 18 economists surveyed by Bloomberg was for an 8.8 percent decline. Unemployment jumped to 5.8 percent from 5.5 percent and retail sales dropped 7.7 percent after declining a revised 4.5 percent in January.
Consumption, which accounts for about half the economy, is dropping as the fastest inflation since 2002 eats away at incomes, exacerbating what’s forecast to be the nation’s first recession since 2009. U.S. and European sanctions over Ukraine and last year’s crash in oil prices have stoked the ruble’s 46 percent slump in 2014, putting Russia on track for the biggest drop in consumption in more than two decades.
“We expect consumption spending and retail sales to remain in deeply negative territory,” Michal Dybula, chief economist at BNP Paribas SA in Warsaw, said by phone before the release. “That’s why we expect the Russian economy to contract quite considerably this year.”
The ruble has lost more than 40 percent since President Vladimir Putin’s incursion into Crimea started a year ago. The Russian currency traded 1.3 percent weaker at 60.0820 to the dollar as of 4:19 p.m. in Moscow.
Fixed-capital investment shrank 6.5 percent in February after falling 6.3 percent the previous month. Real disposable incomes fell 0.6 percent, compared with a revised 1 percent drop in January. Economists predicted decreases of 8.1 percent and 6.3 percent.
The Economy Ministry forecasts gross domestic product will contract 3 percent in 2015, with retail sales falling 8.2 percent and investment tumbling 13.7 percent. Real wages will probably decline 9.6 percent and disposable incomes shrink 6.3 percent, the ministry estimated.