Poland Macro Weekly: Better off and still competitive

TOP MACRO THEME(S):

CEE labour markets – low unemployment, high wage growth (p. 2) – Wage growth in the region has accelerated as a consequence of elevated inflation, which has pushed wage demands up, and in face of a tight labour market, but the ULC growth is expected to moderate to the low single-digit levels.

WHAT ELSE CAUGHT OUR EYE:

According to MinLab estimates, the registered unemployment rate in July rose to 5.0% from 4.9% in June, contrary to expectations that it would remain unchanged. The number of unemployed persons increased by 4.2 ths. over the month, whereas typically we observe declines at this time of year. However, the rise in unemployment is more a result of a decrease in the denominator, that is, in the number of economically active individuals estimated by the Central Statistical Office, which dropped by over 200 ths. in a month. Such volatility is not unusual and tends to be reversed in the following month. On our estimate, seasonally adjusted unemployment rate rose to around 5.1%. On the positive side, the data indicates a 3.5% y/y increase in the number of job offers.
In July, according to BIK, 30.63 ths. people applied for a mortgage. This is about 30% fewer than a year earlier, when the Safe Credit 2% program was launched, but noticeably more than the average since October 2021, which marked the beginning of NBP interest rate hikes. The total value of mortgage inquiries was by 25% lower than in the previous year. The decline in demand is mitigated by rising property prices, which increase the average loan amount.

THE WEEK AHEAD:

We expect GDP to grow by 2.8% y/y in 2q24. Economic growth has accelerated further, but low investment activity has likely been a drag on it.
The final data will likely confirm July inflation at 4.2%, though we are curious about the details of the below-consensus energy price growth seen in the flash reading.
We expect CAB to have posted a monthly surplus in June, despite a rebound in imports.

NUMBER OF THE WEEK:

14.7% y/y – wage growth in the national economy in 2q24, up from 14.4% y/y in 1q24 and significantly more that 10.9% y/y wage growth seen in the enterprise sector.