June Industrial Output Grew 3.8% YoY On Machinery Sector Recovery

July 31, 2017

Ukraine’s industrial output increased by 3.8% YoY in June on significant 15.9% YoY growth in output in the machinery sector, according to data from the State Statistics Committee released last week. On a month-on-month basis, the UkrStat’s industrial index inched up 0.1% MoM in June. For the full 1H17 period, the index declined by 0.4% YoY, with the weakness attributed mainly to the trade blockade of the Donbass occupied territories. Until this March, there were large enterprises on the occupied territories which were controlled by Ukrainian industrial groups and their output was included in the overall statistical data. For 1H17, the extraction sector an output increase was 0.5% YoY and the manufacturing sector was up by 3.6% YoY. However, the utility sector, which reflects energy supplies to large industrial consumers, suffered a drop of 5.6% YoY.

We were a bit surprised by the high industrial output figures for June, and we attribute the 15.9% YoY jump in the machinery sector to military orders. Meanwhile, evidence of a broader recovery in industrial production was a rise of 10.8% YoY in textiles and of 4.3% YoY in the food processing. The steel sector, which accounts for around 25% of the country’s merchandise exports, showed a mixed performance, with output rising by 1.8% YoY in June but coming in 2.7% YoY lower overall for the first half.     
In other important macroeconomic data, UkrStat reported that the agriculture production index declined by 2.1% YoY in 1H17, while the construction index advanced 24.6% YoY in the period.   

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