Russia's July Industrial Output Slows to Annual 7.8% in July 2007

From Bloomberg today:

Russia's July Industrial Output Slows to Annual 7.8%

Russian industrial production growth slowed in July after expanding at the fastest annual pace in two-and-a-half years in the previous month, the Federal Statistics Service said.

Output grew an annual 7.8 percent in July, down from 10.9 percent in June, the Moscow-based Statistics Service said in an e-mailed statement today, falling short of the 10 percent median estimate of 14 economists in a Bloomberg survey. In the month, output fell 2.7 percent after expanding 4.5 percent in June. Output expanded 7.7 percent in the first seven months.

``The pace of growth seen in June was unlikely to be sustained,'' Yaroslav Lissovolik, chief economist at Moscow- based Deutsche UFG bank, said in a telephone interview today. June's output gain was caused by ``one-off investment projects,'' he said, noting output growth was strong in July.

Russia, the world's biggest energy exporter, is seeking to boost manufacturing to become less dependent on revenue from oil and natural gas sales. The government aims to double the size of Russia's economy, the world's 10th biggest, by 2020.

Hydraulic Turbines

Annual output growth in July was led by hydraulic turbines, which increased more than seven times in July from the same month last year, according to the Statistics Service. Tractor output grew 78.3 percent, while the production of construction cranes increased an annual 37.8 percent.

Natural gas extraction decreased an annual 2.8 percent in July, the statement said. Pasta products output decreased 6.9 percent, while bread production contracted an annual 2.7 percent, it said.

Manufacturing output expanded an annual 12.5 percent in July, compared with 15.6 percent in the previous month, the statistics office said.

Electricity, gas and water output expansion accelerated to an annual 3.3 percent from 2.9 percent in June. Mining and quarrying grew 1.2 percent in July, slower than the 2 percent pace of the previous month.

The pace of industrial output growth will slow in the second half of the year as net capital inflow declines, compared with the first half, Lissovolik said. Production will probably grow 6 percent this year, he said.