MOSCOW Reuters - Russia's unemployment rate dropped to a record low in May, but industrial output fell and consumer demand fell after a decline in real wages due to high inflation, data from Rosstat statistics service showed on Wednesday.
Russia's economy is plunging into a recession and inflation is still near a 10 year high after Russia sent tens of thousands of troops into Ukraine on February 24, triggering unprecedented Western sanctions.
Russia's industrial output fell by 1.7% in May compared to a year ago, evidence of an economic contraction was underpinned by Rosstat data showing that Russia's industrial output fell 1.7% compared to a year ago. Some sectors saw a huge downturn, including car production, which shrank 96.7% in annual terms.
In May, the number of people unemployed in Russia fell by 1 percentage point to 3.9% of the workforce, its lowest since the statistics service began publishing the figure in 1992, according to the Eikon database.
This came as experts predicted an increase in unemployment, especially given that scores of Western companies have decided to leave Russia and some have cut their staff.
Analysts polled by Reuters had an average forecast unemployment of 4.5% in May.
Despite the robust employment figure, demand in the economy was weak, Economy Minister Maxim Reshetnikov said on Wednesday.
Retail sales, the main economic growth driver in Russia, fell 10.1% in May after a 9.8% drop in April. Analysts had predicted a fall of 5.5% compared to the year-ago period in the Reuters poll.
The decline in demand comes after real wages, adjusted for inflation, fell 7.2% year-on-year in April, according to Rosstat data released on Wednesday.
Russia's economy will shrink 15% this year and 3% in 2023 due to Western sanctions, exodus of companies, a Russian brain drain and collapse of exports, a global banking industry lobby group said in June.
The Russian official forecasts are less pessimistic. The economy ministry expects gross domestic product GDP to contract by 7.8% in 2022. After the fall of the Soviet Union, it had previously said that the economy was on track to contract by more than 12%, in what would be the biggest GDP drop since the mid- 1990s.