Sharp but temporary increase in wage dynamics

Another month distorted by postponed bonus payments

In accordance with GUS data published today, nominal wage dynamics in the sector of enterprises employing more than 9 persons rose to 5.2% YoY in March vs. 4.0% in February, running above the market consensus (4.6%) and our forecast (4.3%). Conducive to higher wage growth was the postponement of the payment of additional annual bonus in mining (so-called "fourteenth salary”) from February to March in Katowicki Holding Węglowy. The increase in nominal wage dynamics between February and March occurred also due to a favourable difference in the number of working days (in March 2017 the number of working days was higher by one day than in 2016, while in February 2017 it was lower by one day than the year before), increasing the dynamics of piecework pay.

Real, price-adjusted corporate wages increased by 3.1% YoY in March vs. 1.8% in February, due to faster growth of nominal wages and lower CPI inflation (2.0% YoY vs. 2.2% in February, see MACROpulse of 11/4/2017). In subsequent months we expect a slowdown in nominal wage growth rate with the abatement of the above-mentioned temporary effects. We believe that the probability of occurrence of secondary effects caused by increase in inflation in recent months (so called second-round effects) is low (see MACROmap of 20/2/2017).

We are facing stabilization of wage growth

According to GUS data, the annual dynamics of employment dropped to 4.5% YoY in March vs. 4.6% in February. Corporate employment increased by 5.5k MoM in March vs. a 16.5k increase in February. We forecast that annual employment growth will stabilize at ca. 4.5% in subsequent months, as the improvement in the labour market will gradually slow down.

We estimate that the growth rate of the real wage fund (employment times average remuneration) in enterprises amounted to 7.7% YoY in March vs. 6.5% YoY in February. Today's data do not alter our forecast of private consumption dynamics in Q1 2017 (3.9% YoY vs. 4.2% in Q4 2016).

Today's data from the labour market are, in our opinion, slightly positive for PLN and yields on Polish bonds.