According to the State Statistics Committee, industrial output increased by 7.5% YoY in 6 months 2008. However, the monthly growth of industrial output was down by 2.5% MoM in June.

The largest contribution to industrial output in 6 months 2008 was made by mechanical engineering which grew by 29.3% YoY mainly due to the rise in automobile manufacturing. Metallurgy with a 24.7% share in 2007 increased by 3.3% YoY in 6 months 2008 slightly accelerating its growth by 3.1% YoY in 5 month 2008. Food processing maintained a high, still slightly lower than in 5 months 2008, annual growth of 5.5% YoY. Coke and refined petroleum reduced their decrease from 13.5% YoY to 12.1%YoY in 6 months 2008.

June’s deceleration of industrial output growth was mainly related to the slowdown in mechanical engineering, related to the increase in both metal and oil prices on world markets. The reduction in utilities and the chemical industry was highly affected by the growth in the price of gas. At the same time high metal prices on the world market stimulated growth in metallurgy. We expect industrial output to maintain similar growth rates in July, resulting in 8% YoY growth in 2008.

(Sourced from Millennium capital)