Further solid data from the Polish labour market

Nominal wage dynamics back on medium-term trend

In accordance with GUS data published today, nominal wage growth in the sector of enterprises employing more than 9 persons dropped to 4.9% YoY in July vs. 6.0% in June, running below our forecast equal to the market consensus (5.3%). Thus, wage growth has returned near its medium-term trend. The main factor behind slower wage growth rate was the abatement of the positive effect of changed timing of bonus payments in mining, responsible for the wage growth rate increase in June. On the other hand, conducive to higher nominal wage dynamics between June and July was a favourable difference in the number of working days (in June 2017 the number of working days was lower by one day than in 2016, while in July 2017 it was the same as the year before), by increasing the dynamics of piecework pay.

Subsequent sharp increase in employment

According to GUS data, corporate employment rose by 20.6k MoM in July vs. a 11.1k increase in June, which is the record high employment growth in July. Consequently, the annual employment dynamics rose to 4.5% in July vs. 4.3% in June. Wage growth rate increased despite the growing difficulties of companies in finding skilled labour. However, the deceleration of the improvement in the labour market is already signaled by the Ministry of Family, Labour and Social Policy flash estimate of unemployment rate in Poland which, after seasonal adjustments, has grown in July for the first time since April 2013. In effect, we expect a slight decrease of the annual employment dynamics in subsequent months as the improvement in the labour market will continue to slow down. At the same time, the forecasted by us decline in the annual employment dynamics, given continuing strong demand for labour, will be conducive to a gradual increase in wage pressure in the Polish economy.

High wage fund growth continues

base effect associated with the implementation of the 500+ scheme on consumption growth rate, the continuing high dynamics of real wage fund poses a slight upside risk to our forecast of consumption dynamics ( 3.2% YoY in Q3 vs. 4.5% in Q2).

Today's data on corporate wages and employment are neutral for PLN and yields on bonds, we believe.