Industrial production collapsed by almost 10% in May

Industrial production collapsed by almost 10% in May
Industrial production collapsed by almost 10% in May
17 June 2020, 13:57EconomyPhoto:
Federal State Statistics Service (Rosstat) recorded a decline in industrial production in May by 9.6% compared with the same month last year. The fall by April of this year was 5.5%. Since the beginning of the year the industry has shown a decline of 2.4% compared to the same period in 2019.

The economic activity in the country was affected by the coronavirus pandemic. The decline in production is observed in all types of economic activity. Mineral extraction decreased by 13.5% compared to May last year and by 9.9% compared to April this year. Oil production declined the most - by 14.5% compared to May last year and 13.2% compared to April this year. Since the beginning of the year, oil companies have produced 227 million tons of oil, which is 2.3% less than the same period last year. The decrease in oil production was primarily affected by the OPEC + deal, signed by 23 oil-producing countries, which agreed to reduce production in order to stabilize demand and prices. Earlier, the countries participating in the transaction agreed to maintain the previous production volumes for another month, since demand recovery is still at a very slow pace. So far, only China has managed to almost return to previous volumes of consumption. The country does not reach the previous volume a bit so far because the international air service is closed, although its consumption volumes were partially offset by the fact that, fearing an epidemic, the Chinese moved from public transport to personal cars.

The decrease in natural gas production amounted to 16.6% compared to May last year. The decrease in production was affected by a decrease in gas demand, primarily in Europe and China. Earlier, experts noted that while maintaining the current level of gas consumption, storage facilities will be completely filled by August of this year. In order to stabilize prices a bit, Gazprom was previously forced to suspend production altogether for several days. Earlier, experts predicted that gas prices could go negative, as was the case with oil prices in April this year.

Coal production also continues to decline - by 11.2% compared to May last year. “The trend to reduce coal production has been observed since the end of last year. This is due primarily to a decrease in demand for it, as well as overcrowding of storage facilities, ”the Federal State Statistics Service explained .

The extraction of other minerals — crushed stone, gravel, pebbles, as well as precious and semiprecious stones — decreased by almost a quarter (by 21.4%).

A significant drop in industrial production is observed in the industry related to water supply / sanitation and waste collection and disposal. A number of enterprises remained closed during non-working days due to coronavirus, which was the reason for the decline in production by more than 10%. Electricity companies during the period of self-isolation suffered less (minus 4.1% compared to May last year), because the decline in industrial electricity consumption was offset by an increase in domestic consumption. The manufacturing industry for the second month in a row shows a decline of 7%.

The most affected was the production of cars, which last month fell by more than two times (by 54.4%) compared to May last year - to 52.2 thousand units. Production of trucks in May decreased by a third (minus 34.3%) compared to May last year - up to 7.8 thousand units. The production of minibuses with an allowable weight of up to five tons was reduced by a third, and buses capable of transporting more than five tons produced 18.4% less. The production of diesel locomotives was halved, the volume of production of electric locomotives decreased by 20.6%.

A significant decline is also observed in the production of building materials. Wallpaper production decreased by more than half - by 56.1% compared to May last year. However, after non-working days in April, production was more than doubled. Ceramic tile and carpet production decreased by half (by 49.5%), building brick - by 15.9%. It was previously noted that the volume of ongoing housing construction for the first time in the past few years fell below 100 million square meters.

A number of enterprises managed to increase their production during non-working days. In particular, we are talking about food producers, whose production volumes in May grew by 1.5%. A month earlier, industrial production in this area decreased by 5.4%, primarily due to a drop in demand for products in quarantined restaurants, canteens and cafes.

Almost a quarter (22.4%) increased the production of medicines and supplies. In this direction, there has been a significant increase in volumes - from the beginning of the year it amounted to 14.3%. The peak of production activity was noted in April this year. The production of medical equipment increased 2.7 times.

The production of mineral fertilizers, household appliances and furniture continues to grow. TV production for the month almost doubled compared to April. The production of washing machines increased 3.3 times, the production of refrigerators increased 2.3 times.

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