“Stocks of unsold goods declined which, combined with a sluggish contraction of the new business sub-index, suggest that the headline index may keep rising into the second quarter,” Dmitri Fedotkin, a VTB economist, said in the statement. Still, “no sharp recovery” in the index is to be expected.
The index showed contraction for the eighth straight month, a longer period of decline than the one registered in 1998, when the government devalued the ruble and defaulted on $40 billion of debt.
The manufacturing workforce shed jobs for the 11th month in a row, the longest period of contraction in the survey’s history, VTB said. “Firms reported that the redundancies resulted from lower workloads and the subsequent need to cut spare capacity,” it said in the statement.
OAO Severstal, Russia’s biggest steelmaker, plans to cut as many as 9,500 jobs at its Russian units, Chief Executive Officer Alexei Mordashov said on March 11. The metals industry as a whole could cut as many as 60,000 jobs this year, or 5 percent of the workforce as demand and prices slump, the Industry and trade Ministry said.
3 comments:
Hi Eduard
Oil prices seem to be going up back. Do you think $70 per barrel would be good enough for Russia?
Hi Nobody,
"Oil prices seem to be going up back."
My, oh, my, you are in a hurry :)
All this depends on whether you believe the "green shoots" story, or whether you think what we are seeing is a bull run in what is basically a bear environment.
Basically I am not optimistic that we will see any firm rebound in commodity prices in the short term. We have already been looking at the situation in China, which is gritting its teeth and hanging on. Take a look at my Global Manufacturing PMI posts on Global Economy Matters for a broader perspective.
We certainly do see some signs of movement in countries like India, Brazil, Chile, Peru stc. But this is all tentative and not going to be earth shattering initially.
Meantime the whole of the OECD is stuck. We will have large contractions this year, and probably milder - but still contractions - next year. So I don't see where the demand is going to come from to push prices back up again.
US retail sales contracted again in April, and this is in the middle of a stimulus package which will mean the US deficit will run at at least 12.9% of GDP this year. Next year they will have to reduce this. So the US may well see negative growth next year too, as consumers pay down their debts.
The crisis in Southern and Eastern Europe is only just starting, and export dependent countries like Sweden, Japan and Germany are really, stuck, and in a very bad way. Basically Russia, with its commodity export dependence is in the same mess.
I am not optimistic, and would give a 50-50 chance of Russian default in 2010 as the level of bad loans rises steadily.
"Do you think $70 per barrel would be good enough for Russia?"
Well, guessing, this would obviously be better for them (really they need $90 plus given the indebtedness), so maybe you could say the defaul probability would drop to 30-70, but it would be cliff hanging, and very touch and go, and as I say, I personally don't see $70 a barrel for oil in 2010, where the general global tendency in prices will be deflationary, and lead by China and Japan.
I will try and put anoth Russia post up soon.
This one from bloomberg this morning makes a lot of sense to me. I just don't see where people think the demand is going to come from.
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May 14 (Bloomberg) -- Crude oil may fall to $50 a barrel as prices have risen too far from their 20-day moving average, said Masahiko Sato, a senior analyst at OvalNext Corp.
Sato expects oil to drop to $43.83 in New York, a one-month low reached on April 21, should it decline below the $50 support level amid a lack of a recovery in demand.
“Given a lack of bullish fundamental factors, the market is definitely overheated,” Sato from OvalNext, a commodities investment adviser, said by phone from Tokyo yesterday. “Prices that are 10 percent higher than the moving average are clearly showing sell signals.”
The percentage of variance from the 20-day moving average line rose to 14 percent on May 8 and has been near 12 percent, he said. Prices often peak or reach a bottom when the rate is near 15 percent, according to Sato.
Crude oil fell for a second day, declining as much as 41 cents, or 0.7 percent, to $57.61 a barrel on the New York Mercantile Exchange. Oil has risen more than 50 percent from about $32 a barrel reached in December as gains in the stock markets boost optimism of a recovery in the economy.
Yesterday, the contract fell 83 cents, or 1.4 percent, to settle at $58.02 a barrel, the biggest decline since April 27. Oil’s 20-day moving average was at $52.67 a barrel yesterday, suggesting the settlement price was still 10 percent higher than the moving average figure.
Analysts use moving averages to identify trends and find support and resistance levels for prices.
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