October economic data show Russian economy still slumping

MOSCOW (Reuters) - Russian retail sales fell further and an increase in real wages slowed in October, official data showed on Friday, signaling that an economic slump is yet to run its course.

A worker checks the valve of an oil pipe at an oil field owned by Russian state-owned oil producer Bashneft near the village of Nikolo-Berezovka, northwest of Ufa, Bashkortostan, January 28, 2015. REUTERS/Sergei Karpukhin/File Photo

Russian officials have said in recent months the economy will return to growth soon, because it has passed the most acute phase of an economic crisis sparked by low oil prices and Western sanctions.

However, the October data came in below expectations and revised figures for September paint a gloomier picture. Taken together, that could mean Russia will return to economic growth later than previously thought.

Statistics service Rosstat said retail sales fell by 4.4 percent in October from a year ago after declining by 3.6 percent a month earlier.

The drop in retail sales, which reflect momentum in consumer demand, the economy’s key growth driver, was larger than a 2.9 percent contraction predicted by analysts polled by Reuters.

“The improvement seen in September was a one-off,” Capital Economics said in a research note. “And with fiscal policy tightening and slack still in the labor market, we expect consumers to remain under pressure”.

Capital investment, the second most important economic driver after consumer demand, also slowed, shrinking 2.3 percent on the year in the period from the beginning of January to the end of September.

Rosstat said real wages, which are adjusted for inflation, grew by 2.0 percent in October after increasing by 1.9 percent in September. A month ago, it said September growth of real wages was at 2.8 percent.

Other economic indicators also suggest an economic recovery is not imminent. The monthly economic report showed the unemployment rate rose to 5.4 percent in October from 5.2 percent in September.

On the upside, industrial output was down only 0.2 percent on the year in October and up 5.8 percent on the month.

Many believe any economic recovery is likely to be anemic as Russia faces budget shortfalls caused by low prices for oil, its key export.

From the central bank’s point of view, the recent set of data is unlikely to change is monetary policy stance - it had pledged to keep rates unchanged until the end of the year.

NOTE - For key Russian indicators click here 0#ECONRU.

Reporting by Andrey Ostroukh and Alexander Winning; Editing by