Poland Macro Weekly: Mixed signals from the economy

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TOP MACRO THEME(S):

• Winter stockpiles (p.2) – GDP growth in 3q24 slowed down to 2.7% y/y from 3.2% y/y in 2q24. Breakdown of GDP growth is a major disappointment with stagnant consumption and investment, but we expect a re-acceleration of economic growth in Poland in the final quarter of this year and in 2025.

WHAT ELSE CAUGHT OUR EYE:

• CPI inflation in November (flash estimate) fell to 4.6% y/y from 5.0% y/y in October, in line with our estimate and below market consensus of 4.7% y/y. The temporary decline was mainly the result of high base effect in fuel prices, which pushed the y/y growth down to -6%. We estimate that core inflation increased to 4.2% y/y. In December, CPI will rise again to around 5% y/y. Inflation should peak in 1q25, slightly above 5% y/y and in 3q25 it should return to the broadly defined inflation target (2.5% y/y ± 1pp).
• Average wage in the enterprise sector in October rose by 10.2% y/y, slightly above expectations. In real terms, wages grew by 5.0% y/y, at the slowest pace this year. Nominal wage growth has been declining since February, when it reached 12.9% y/y, and is getting very close to single-digit levels. Meanwhile average employment in the enterprise sector decreased by 0.5% y/y, in line with expectations. Nevertheless, the impact on the unemployment rate remains limited, to put it mildly. The registered unemployment rate as of October fell to 4.9% equaling the record low from last June. The m/m decline in the number of unemployed was not impressive, while the uptick in the number of active persons supported the result.
• Revenues of non-financial enterprises in 3q24 increased by 0.4% y/y, following declines in a few previous quarters. However, even despite improving topline, net financial results dropped by 29.2% y/y. The rise in costs (1.7% y/y) outpaced revenue growth, reducing profitability, with the net profit margin at 2.9%, below average for 2018-23. Corporate investments dropped 11.5% y/y.

THE WEEK AHEAD:

• The MPC meeting will be in the spotlight. We have no doubts that NBP rates will be kept on hold, so the most interesting thing will be rhetoric response of Polish central bankers to the recent mixed signals from the economy (more on p.2). Before MCP meeting on Wednesday, Monday will bring PMI for November.

NUMBER OF THE WEEK:

• 3.2pp – inventories contribution to GDP growth in 3q24.

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