Industry flat yoy, retail trade buoyant in April

Monthly industrial production in Ukraine was flat yoy in April, recovering from negative territory in March (-1.1% yoy) and taking 4M12 growth to a mere 0.7% yoy, UkrStat reported yesterday. The improvement in industry performance came mainly on the back of a recovery of machinery output (+6.5% yoy in April vs. -5.6% in March). Steelmakers managed to narrow their decline to just 0.2% yoy in April from 1.6% in March. Meanwhile, retail trade turnover remained strong as April saw a 14.9% yoy increase in real terms (+13.2% in 4M12).

Vitaliy Vavryshchuk: While domestic consumption continues to be solid (as the retail trade data clearly shows), it is of little help for domestic manufacturing companies, whose output remains dominated by industrial products destined to be exported. As the external market remains feeble, we do not expect a turnaround in the coming months and see industry hovering near zero at least until end-1H12. We maintain our full-year projection for industrial output growth at 2.9% yoy but note downside risks to this estimate. Domestic private consumption is set to remain the only economic driver this year, supported by double-digit growth in household incomes (thanks to multi-year low inflation).