(Updates with analyst in fourth paragraph, market reaction in fifth.)
Oct. 17 (Bloomberg) -- Russian industrial production grew last month at the slowest pace since it began expanding in October 2009 as increasing risks to the global economy weighed on inventory accumulation and a weaker ruble hurt sentiment.
Factories, mines and utilities increased output 3.9 percent from a year earlier in September after a 6.2 percent gain in August, the Federal Statistics Service in Moscow said today in an e-mailed statement. That’s lower than all 15 forecasts in a Bloomberg survey, which had a median estimate of 5.5 percent. Production shrank 0.8 percent from the previous month.
The International Monetary Fund trimmed growth projections for emerging countries last month amid Europe’s debt crisis and a slower global economy. Russian manufacturing endured its weakest three months since the fourth quarter of 2009 in July to September, according to HSBC Holdings Plc, while the government has cut its full-year industrial-output growth forecast after companies finished restocking inventories.
“The deterioration in the global economic outlook may have prompted producers to rethink their strategies for the upcoming months,” Tatiana Orlova, an economist covering Russia and the former Soviet Union at Nomura International in London, said today by e-mail. “Episodes of ruble weakening usually have a negative impact on confidence,” which partly explains September’s “gloomy” data, she added.
The 30-stock Micex Index was 0.8 percent lower at 1,421.23 at 4:27 p.m. in Moscow. The ruble rose 0.4 percent to 30.7555 per dollar and was 1 percent stronger at 42.4200 per euro. The Russian currency lost 10 percent against the dollar in September, the largest monthly fall since January 2009.
Growth in the three main industrial categories slowed, the data showed. Mines boosted output 1.4 percent from a year earlier in September after a 3.3 percent gain in August. Manufacturing expanded 4.4 percent compared with 7.1 percent, while utilities grew by 0.2 percent compared with 2.3 percent.
New export orders dropped for a third straight month in September and weakening foreign demand means manufacturers “face lasting stagnation,” HSBC said Oct 3.
Urals crude, Russia’s chief export blend, dropped 12 percent last month. The economy of the world’s biggest energy exporter will match the level reached before the crisis by the end of the year, taking twice as long compared with its recovery after the 1998 sovereign-debt default, Renaissance Capital said in an Oct. 14 report prepared with Moscow’s New Economic School.
OAO AvtoVAZ, Russia’s largest carmaker, saw sales growth slow to 1.8 percent last month from 11 percent in August. OAO Raspadskaya and OAO Mechel last month reduced 2011 coal output targets by 20 percent and 10 percent, respectively, citing mine closures.
Industry Forecast Cut
The Economy Ministry predicts industrial output will expand 4.8 percent this year, less than the initial forecast of 5.4 percent, Deputy Economy Minister Andrei Klepach said Sept. 20. The economy may accelerate in the second half after growth slowed to 3.4 percent from a year earlier in the second quarter, from 4.1 percent in the January-March period, according to a revised government forecast published last month.
Companies were ramping up production faster than sales in the first half in hopes of selling once the economy accelerated, Valery Mironov, chief economist at the Center of Development in Moscow, an independent research group that advises the Economy Ministry, said by phone Oct. 13.
Producer prices rose 18 percent in September from a year earlier, the statistics service said Oct. 14. That was less than the median forecast of 18.9 percent in a Bloomberg survey. Producer-price growth will continue to slow, rising 12.1 percent for the year, according to Moscow-based UralSib Financial Corp.
“Due to increased risks of an economic slowdown in developed countries, producers will be reluctant to increase prices rapidly,” UralSib analysts Alexei Devyatov and Olga Sterina said today in an e-mailed note before the release.
--With assistance from Zoya Shilova and Jack Jordan in Moscow. Editors: Andrew Langley, Paul Abelsky, Alan Crosby
To contact the reporters on this story: Scott Rose in Moscow at email@example.com; Alena Chechel in Moscow at firstname.lastname@example.org
To contact the editor responsible for this story: Balazs Penz at email@example.com