Industrial Output Down 4.2% YoY in July and 7.7% YoY for 7M20

August 31, 2020
 

News
Ukraine’s nationwide industrial production dropped by 4.2% YoY in July while the drop year-to-date through July was 7.7% YoY, the State Statistics Committee (UkrStat) reported last week. The month-on-month change in July (unadjusted for the different number of days) was a growth of 3.9%. In the manufacturing sector, the aggregate production drop was 6.6% YoY for the month. In the extraction sector, there was a decline of 0.7% YoY in July while the utility sector output rose by 0.7% YoY. For 7M20, UkrStat’s industrial index is down by 7.7% YoY.


Commentary
It should be noted that Ukrainian industry is currently performing hardly any worse than it was before the start of the COVID crisis in March, as there were year-on-year declines in the 3-5% range during the November-February period. We take this as an indicator that the Ukrainian economy is weathering the COVID rather well so far.
There was a mixed picture in the extraction sector in July, with a widely-expected output rise in coal production (+4.7% YoY) combining with a surprising decrease in iron ore output (-5.1% YoY) amid rising global iron ore pricing. Ukraine’s oil&gas extraction edged up by 0.7% YoY in July but still showed a decline of 2.1% YoY in 7M20. In the manufacturing category, the machinery sector remained the worst performer, demonstrating a 21.3% YoY slump in output in July and a 22.1% drop in 7M20. The pharmaceutical sector, which had been immune to the current economic slowdown in previous months, was hit with a 19.6% YoY drop in output in July. On a monthly basis, the drop was 11%, indicating that the pharmaceutical industry’s output might be facing negative effects from overstocking distributors.
In other macroeconomic statistics, retail sales jumped by 8.5% YoY in July, which we believe was a result of the vacation period which saw more Ukrainians spending their money inside the country this year that usual. On a month-on-month basis, retail sales rose by 12.1% from June to July. For 7M20, the retail sales index is higher by 4.2% YoY.
In the agro sector, aggregate output in January-July fell 11.2% YoY. Unusually cold weather conditions during May followed by a rainfall deficit this summer have led to a lower harvest of all key crops.


 


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