Signals of growing wage pressure are still missing

In accordance with GUS data published today, nominal wage dynamics in the sector of enterprises employing more than 9 persons dropped to 3.9% YoY in September vs. 4.7% in August, running below our forecast (4.4%) and the market consensus (4.6%). In real terms, price-adjusted corporate wages rose by 4.4% YoY in September vs. 5.5% in August.

The decline in nominal wage growth was partly due to the high base effects from the year before (a sharp, against a historical backdrop, monthly increase in wages in September 2015). Conducive to a decrease in nominal wage growth between August and September was also the unfavourable difference in the number of working days (in August 2016 the number of working days was higher by 2 than in 2015, while in September 2016 it was the same as the year before) reducing the growth of pay for piecework.

The average nominal pace of wage growth in Q3 amounted to 4.5% YoY vs. 4.9% in Q2. Thus, despite the business survey results pointing to growing difficulties in finding skilled labour, the data do not signal a stronger increase in wage pressure. This is consistent with the July NBP business survey (so-called Quick Monitoring), in which merely 10.2% of companies covered by the survey pointed to an increase in wage pressure. We expect that in the subsequent months, the annual nominal corporate wage dynamics will be slightly above 4.0%, which will be in line with its short-term trend.

Increase in employment is not slowing down

According to GUS data, corporate employment rose by 10.8k MoM in September vs. a 1.3k decrease in August – the sharpest monthly increase in employment in September since 2010. This confirms our view that the unexpected decline in employment in August was temporary (see MACROpulse of 16/9/2016), as according to the information obtained from GUS it resulted from a transfer of some persons so far employed in the sector "information and communication” to branches not covered by corporate sector statistics. Thus, the decline in employment in August does not signal a deterioration in the labour market, as these persons will be included in statistics concerning employment in the national economy.

The annual employment dynamics rose to 3.2% YoY in September vs. 3.1% in August. We maintain the view that employment dynamics is close to the local maximum. We expect that from Q4, the annual employment growth rate will start to gradually decrease, which will be in line with our scenario assuming that Polish labour market will achieve equilibrium in 2017.

Slight decline in wage fund growth in Q3

We estimate that the real wage fund growth (employment times average wages) in enterprises amounted to 7.8% YoY in September vs. 8.8% in August. Thus, in the whole Q3 the real wage fund growth dropped to 8.6% vs. 8.7% in Q2. Combined with the expected by us positive impact of the 500+ scheme on consumption (see MACROmap of 5/9/2016), the data do not alter our forecast, in which real consumption dynamics will increase to 4.0% YoY in Q3 vs. 3.3% in Q2.

Wage and employment data neutral for PLN and bond yields

Today's weaker than expected data on average wages and higher than the market consensus data on corporate employment are neutral for PLN and bond yields, we believe.