Russian data showed it is too soon to call the bottom on the country's first recession in a decade, with unemployment rising to a 9-year high as 200,000 lost jobs in April and retail sales slumped for a third month in a row.
News that unemployment rose to 7.7 million in April, or 10.2% of the economically active population, comes hot on the heels of a record slump in industrial output.
Russia's once buoyant economy has fallen prey to lower oil prices at a time when the global slowdown reduces demand for its commodities, while the worldwide credit crunch leaves companies struggling to refinance foreign loans secured in better days.
That has filtered through into the domestic economy, with some 3.2 million losing their jobs since August, and many more forced to cope with lower salaries and shortened working weeks.
Politicians - used to nearly a decade of oil-fuelled boom - had hoped the worst of the slowdown came in the first quarter.
But the latest data adds credibility to the Economy Ministry forecast the recession could last for up to two years.
Retail sales fell 5.3% year-on-year, continuing their first contraction in nine years which started in February. Capital investment shrank 16.2%, along with unemployment and retail sales coming in gloomier than forecast.
However, the very fact that unemployment data was published should provide some relief to investors, who had been worried by the absence of a monthly breakdown in the March data, fearing this was a possible attempt to hide bad news.
Real wages shrank 3% - less than expected but still their steepest fall in almost a decade.
Earlier on Friday, data showed foreign direct investment in Russia slumped 43% in the first quarter
This week alone, Russia's largest carmaker AvtoVAZ said it would slash working hours next month while smaller rival IzhAvto plans to shed 2,500 jobs, or half its workforce, from August.
The world's largest aluminum producer UC RUSAL expects stocks of the metal will keep rising until at least the third quarter, signaling lackluster demand, while Russia's largest lender and most trusted bank Sberbank does not rule out a loss this year.
As they tighten their belts, consumers are switching to cheaper shops to the benefit of cut-price retailers like Magnit, which saw sales rising by one-third in April.
Smaller supermarket bills weigh on the official retail sales data, which is calculated in billions of rubles.
So far, public unrest has been very limited and popularity ratings for President Dmitry Medvedev and Prime Minister Vladimir Putin are still running high.
The central bank's success in putting a lid on ruble depreciation earlier this year is seen as a key factor in keeping the population quiet, but unrest remains a key risk.
“Should the economic situation deteriorate and unemployment reach 15%, it may become a real challenge to the authorities,” Merrill Lynch said in a recent note. (Reuters)