Poland Macro Weekly: Fears crawl out of the closet…or rather, out of the data

TOP MACRO THEME(S):

Not as bad as it seems (p. 2) – Full set of September data made us revise downwards GDP forecast for 3q24 to 3.1% y/y, but we believe that consumption decelerated to a lesser extent than retail sales data suggest.
There is no escape from fiscal consolidation in the CEE (p. 3) – As Czechia remains a fiscal leader in the region, details of deficit reduction under the EDP are gradually emerging from the rest of the CEE-4.

WHAT ELSE CAUGHT OUR EYE:

In October consumer sentiment deteriorated both with regard to current assessment and expectations. Consistent with weak retail sales data was worse assessment of the ability to make important purchases. Declarations regarding future purchases also deteriorated. The latest data also brought a worsening of inflation expectations. The improvement in savings prospects has stalled, which we attribute to worse assessments of the future financial situation of households (possibly also due to inflation), while purchasing plans remain limited.

The average gross salary in the enterprise sector in September increased by 10.3% y/y, i.e. 0.8pp slower than expected. Real wage growth was 5.2% y/y, the lowest this year. Wages momentum decelerated further (see chart below). Employment in the sector decreased by 0.5% y/y, in line with expectations, yet the registered unemployment rate remained stable at 5.0%, with the number of unemployed staying close to historical minimum. However, data brought some signs of cooling on this front – the number of unemployed dismissed for company reasons increased by 2.0% y/y, the highest since August 2023. The number of unemployed graduates increased by 1.1% y/y.

According to the NBP’s Quick Monitoring Survey, condition of the enterprise sector in 3q24 remained weak, but outlook for the next quarter as well as in 12 months horizon improved.

THE WEEK AHEAD:

Thursday will bring flash CPI estimate for October, which we see close to September reading. Next working week in Poland will be shorter as Friday is All Saint’s Day.

NUMBER OF THE WEEK:

21% – share of enterprises forecasting wage increases, the lowest since 2020