RUSSIAN CONSUMERS REDUCE SPENDING

       Russian retail sales dropped the most in almost 10 years in July, sliding for a sixth consecutive month, as households cut back spending after incomes dropped and consumer borrowing declined.
       Sales slid 8.2 per cent from a year earlier after declining 6.5 per cent in June, the Federal Statistics Service said in an e-maled statement from Moscow yesterday.
       That was more than the median forecast of 16 economists surveyed by Bloomberg for a 7.1-per-cent drop. Retail sales were up 1.9 per cent on the month.
       "Consumer demand remains weak and there are no major positive advances in sight just yet," Andrew Howell, a New York-based Citigroup strategist, said before the release.
       Retail sales began slipping in February for the first time since September 1999 as the weaker ruble, wage cuts and rising unemployment forced Russians to curb spending.
       The central bank's five interest-rate cuts since April 24 have failed to spur lending as banks hold back on concern borrowers cannot repay loans.
       Lending to consumers dropped 1.1 per cent in June for the fifth consecutive monthly decline, according to Bank Rossii.
       Gross domestic product contracted a record 10.9 per cent in the second quarter after shrinking 9.8 per cent in the first three months, ending 10 years of expansion that averaged almost 7 per cent. Average wages rose sixfold in the past decade as the economy recovered from the debt default and ruble devaluation of 1998.
       Russians responded to the economic crisis by putting 17 per cent of their income into savings accounts last quarter, compared with 8.7 per cent in the first three months of the year. Russia's Deposit Insurance Agency said last week.
       A third of Russia's 42,000 clothing retailers will close by the end of this year as demand for apparel and fashion wanes during the slump, according to the European Fashion and Textile Export Council.
       Russia's unemployment rate remained unchanged at 8.3 per cent in July.
       The average monthly wage fell an annual 5.8 per cent in July, while real disposable incomes decreased 5.4 per cent.
       Capital investment tumbled 18.9 per cent as industrial output declined an annual 10.8 per cent in July.