The fall in private consumption exceeds all expectations

Rosstat data on domestic consumption and investment in March 2015 give mixed signals. Against the backdrop of growing unemployment, the rate of contraction in real wages and food consumption has stabilized. The fall in capital investment, according to statisticians, has slowed down - this, however, is not revealed by alternative calculations.

Preliminary data from Rosstat on the state of domestic demand in the first quarter and March 2015 record multidirectional dynamics in employment, household income, private consumption and capital investment. In March, another 100 thousand people lost their jobs (the total number of unemployed people is 4.5 million), and the unemployment rate rose to 5.9% from 5.8% at the end of February 2015. At the same time, despite the acceleration of annual inflation in March to 16.9% (by 0.2 percentage points), the rate of reduction in real wages slowed down at the same speed - to 9.3% in March (minus 8.3% for the quarter ).

Igor Polyakov from TsMAKP explains Rosstat’s figures based on the high base of March 2014, admitting that, taking into account seasonality, in March real wages decreased by 0.5% - noticeably less than in February (minus 1.3%). Slowing inflation should support the positive dynamics of the indicator. In any case, the first deputy chairman of the Central Bank, Ksenia Yudaeva, said on April 17 that this could be discovered by the end of April. However, a slowdown in inflation does not guarantee a sustainable improvement in wage statistics. “In the second half of the year, the regions must index payments to public sector employees by 10%. Given the current state of their budgets, it is unknown where the money will come from for this,” says Yulia Tseplyaeva, head of the Center for Macroeconomic Analysis of Sberbank.

Against this background, the depth of the decline in private consumption continues to increase, exceeding economists' expectations. In March, in annual terms, retail turnover dropped by 8.7% (consensus forecast of the Interfax agency - 8.4%). This result, according to Rosstat estimates, was ensured by the consumption of non-food products, which decreased by 9.9% in March (by 7.1% in February and 6.8% in the first quarter). At the same time, food consumption, as in February, decreased by 7.5% (6.6% for the quarter). “The consumer is becoming more and more frugal. If in 2009 Russians began to recover from the crisis by the second quarter, then in the current situation we have recorded a consistent deterioration in all indicators for more than six months - since August 2014. Now consumers are going through a period of adaptation to new prices, and consumer sentiment today appears to be at its lowest point,” concludes Nielsen Russia commercial director Ilona Lepp, based on a study of consumer sector companies in March. The continuing decline in consumer sentiment is also evidenced by surveys by Rosstat and the Central Bank, which, among other things, record the actual refusal of households to make purchases on credit.

A relative increase in the population's propensity to save can be considered a relative positive for March. However, according to TsMAKP estimates, citizens brought more in foreign currency bank deposits in March than in ruble deposits. According to Igor Polyakov, money that was stored “under the pillow” or in safe deposit boxes was returned to organized savings, which rather indicates not an increase in saving sentiment, but rather a certain restoration of confidence in the banking system. “The prices are such that there is nothing to save,” agrees Yulia Tseplyaeva.

Theoretically, the increase in savings could be associated with a slower decline in capital investment - from 6.5% in February to 4.3% in March (6% per quarter). Economists interviewed by Kommersant could not find fundamental reasons to explain this assessment of Rosstat, and the index of supply of imported and domestic investment goods, according to TsMAKP estimates, dropped sharply in March. “After a pause in February, the decline in investment activity in the economy accelerated in March. The volume of supply of investment goods decreased by 11.8%, and in the whole quarter (March to December) - by 16.6%,” the study notes. Yulia Tseplyaeva suggested that the positive assessments of statisticians are explained by the growth of state investments in the defense sector. Vladimir Salnikov from TsMAKP believes that the explanation is even simpler. The fact is that the investment deflator, at least used by Rosstat for quarterly data, does not include changes in the ruble exchange rate. Accordingly, the index of investments, in which the share of imported equipment is large, is simply overestimated.

“The consequences of the crisis will be especially strongly felt at the end of summer - autumn of this year. It is then that the depth of the crisis will be more or less clear and it will be possible to fully assess its consequences,” says Alla Salmina from the Laboratory for Comparative Research of Mass Consciousness at the Higher School of Economics.

Alexey Shapovalov

Domestic demand sees no bottom