The Russian Federal Sate Statistics Service had upwardly revised the real wage growth for February and March to 0.6% and 1.6% respectively. This attracted attention to recovery in income. The revision was partially due to the pronounced disinflation during that period, noted Societe Generale in a research report. But the nominal wages adjustment is significant. Certain one-off payments are expected to be responsible for a rise in nominal wages; however, they are unable to notice a sustainable rebound in wages throughout a wider range of activities.
In spite of a rebound in the overall business sentiment, the difference between the private and public sectors, particularly private industries producing tradable goods, is likely to continue, added Societe Generale. However, the rebound in wages might weaken as the strong disinflation momentum has diminished.
“We expect real wages to grow by 1.8% yoy in April and the unemployment rate to remain capped at 6.0% nsa and 5.6-5.8% in sa terms”, said Societe Generale.
Meanwhile, retail sales continue to lag real wages. In March, retail sales fell 5.8% y/y. However, there is certain savings behaviour that might clarify sales’ medium-term lag, noted Societe Generale. If the Russian economic conditions continue to rebound, a major chunk of liquid savings might help in a rebound in consumption. However, the progress is expected to be slow and lag income growth by three to six months. Hence retail sales are expected to have remained almost flat at -5.3% y/y in April, according to Societe Generale.
