RUSSIA: Manufacturing Sector Produces Profit

Rosstat, the Russian federal statistics service, reports that, in January-May 2007, the balanced financial result (profit minus loss) of Russian enterprises, excluding the financial sector, was 1.79 trillion rubles, 22.8 percent higher than in the same period of last year.

At the same time, the growth of profit in the Russian economy slowed significantly. Last year, that rate amounted to 35.2 percent.

That tendency is being overcome, however. The growth rates of profit were low at the beginning of this year and have picked up momentum in recent months.
Profit averaged 330 billion rubles per month in the first quarter of the year, and 400 billion rubles monthly in April and May.

Amurmetall It is also significant that profit in the industrial sector is being concentrated in manufacturing. In January through May 2006, manufacturing accounted for 30.9 percent of all profit, while, in the first five months of this year, it made up 37.7 percent. For April-May 2206 and 2007, the difference is even more notable, 35 percent versus 46 percent, according to the Center for Development.

KhabarovskFluctuation of profit in production industry is easily explainable as world raw materials prices fluctuate, especially oil prices, but there is no single explanation of the growth of profit in manufacturing.

It is possible that the first results of the investment boom, technical refitting and the growth of labor productivity are being seen. If the growth of profit continues, that will mean the competitiveness of the Russian economic is greater than is usually thought.

In addition, it could confirm that the strengthening of the ruble is not a threat to Russian industry in the short term.
Via: Kommersant