Ukraine industrial output decreases 0.2% in July

Ukraine’s industrial output decreased 0.2% yoy in July, improving from a 3.4% yoy decline in the prior month, according to state statistics released on August 22. The main factors were declining output in machinery (-11.5% yoy vs. -2.4% yoy in June) and mining (-0.4% yoy vs. -8.9% yoy). At the same time, other core industries improved substantially such as chemicals (+7.1% yoy vs. +5.2% yoy in June), utilities (+6.2% yoy vs. +0.1% yoy) and metals (+4.3% yoy vs. +0.4% yoy).

Both the Donetsk and Luhansk oblasts demonstrated growth in July at +9.0% yoy (-12.0% yoy in June) and +8.1% yoy (-4.7% yoy), respectively.

For 7M16, industrial output increased 1.7% yoy.

Alexander Paraschiy: The recovery of metals, utilities and even a slowdown in the mining decline were all in line with our expectations. The state railway company’s lifted ban in end-June on cargo traffic with the occupied territories set the stage for the better performance of core industries in July. Yet the plunge in machinery production in July was a surprise, for which we don’t have enough info to draw any conclusions. It might just as easily turn out that equipment supplies dropped temporarily in July. 

Against this backdrop, we still are keeping our initial industrial output forecast at 2.0% yoy growth for 2016. Should it happen that the poor tendency in machinery sustains itself in the upcoming months, we will have to revise downwards our industrial output estimates.