Nearly 400,000 unemployed Russians found jobs last month, but the economy contracted as investment continued to fall and growth in retail sales and disposable incomes was very slow, data showed on Friday. Russia's economy started to recover from its first recession in a decade in the second half of last year, but the path has been a slow and unsteady one, with any growth driven by higher oil prices and exports while domestic demand lags.
Seasonally-adjusted gross domestic product (GDP) fell 0.9 percent in February, erasing most of January's gains, Economy Minister Elvira Nabiullina told reporters. "It shows that the factors that were supposed to stimulate the economy are not fully working yet," she said, adding that the data confirmed the unstable nature of Russia's recovery.
Rapid appreciation of the Russian rouble poses another risk as it makes Russian exports less competitive. On Friday, the central bank was forced to shift the rouble's trading band for the 21st time since mid-February as the currency continued to surge on the back of rising oil prices and demand for higher-yielding assets.
Russian retail sales rose for a second month in a row after a year of decline, data from the Federal Statistics Service showed, but the year-on-year increase of 1.3 percent was half as much as expected and looks very weak when compared to double-digit growth seen before the crisis. Investment fell for a 16th month in a row, suggesting that demand is too weak for companies to think about expanding while banks remain reluctant to lend. One bright spot was a 2.9 percent year-on-year rise in real wages - their best performance in 15 month.
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