MOSCOW (Reuters) -Growth in manufacturing sectors related to defence was behind a surprise spike in Russia’s industrial output in October, which was significantly above expectations and the biggest since December, analysts said on Thursday.
Industrial output rose 3.1% in October year-on-year and 3% month-on-month on a seasonally adjusted basis, significantly above analysts’ expectations of 0.3% year-on-year. That followed a 0.3% increase in September.
“In processing sectors, the largest segment, growth was still driven by the engineering industries, which are largely oriented towards defense,” said Denis Popov from PSB bank, which is focused on financing the military sectors.
The production of transport vehicles and equipment, including military combat vehicles, aircraft, ships and railway locomotives, accelerated in October to 41.0% year-on-year from 6% in September, according to the state statistics agency.
The production of finished metal products, including weapons and ammunition, increased by 19.4% after a decrease of 1.6% in September. The decline in passenger car production accelerated to 46.7% from 1.7% in September.
Renaissance Capital analyst Andrei Melashenko noted that growth in areas oriented towards government orders has returned to the average values observed since 2023. Defence procurement is done through government orders.
He estimated growth in sectors such as finished metal, electronic and optical products at 22.7% year-on-year, from 4.4% in September.
The analysts did not say what the reasons were for the spike in October. Military procurement data in Russia is confidential.
Manufacturing output accelerated to 4.5% year-on-year in October from 0.4% in September, while mineral extraction increased by 1.3% after 0.2% growth the previous month.
Russia’s economic growth is set to slow to about 1% this year from 4.3% in 2024, mainly due to the central bank’s policy of fighting inflation.
In the first 10 months of the year, industrial production grew by 1.0%, compared to a 5.2% growth in January-October 2024, with output falling across most civilian sectors.
The economy ministry cut the industrial output growth forecast for 2025 to 1.5% from 2.6%. It grew by 5.6% last year.
(Reporting by Darya Korsuinskaya; writing by Gleb Bryanski, editing by Ed Osmond)
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