Surprisingly sharp increase in employment in April

Lower scale of rises in retail trade reduced wage growth

In accordance with GUS data published today, nominal wage dynamics in the sector of enterprises employing more than 9 persons dropped to 4.1% YoY in April vs. 5.2 % in March, running below our forecast (4.4%) and the market consensus (4.5%).

Conducive to lower wage growth was the abatement of the effect of bonuses paid in mining (see MACROpulse of 19/4/2017). Wage growth was also negatively impacted by the high base effect from the year before in the category "retail trade” caused by last year's pay rises in Biedronka retail chain (see MACROpulse of 16/6/2017). The retail chain increased wages also in April 2017, however, the scale of the pay rise on a monthly basis was much lower than in April 2016 which was conducive to lower annual wage growth. The decrease in nominal wage dynamics between March and April resulted also from the unfavourable 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 April 2017 it was lower by two days than the year before), lowering the dynamics of piecework pay.

Real, price-adjusted corporate wages dropped to 2.0% YoY in April vs. 3.2% in March, due to slower growth of nominal wages and stabilization of CPI inflation in April (see MACROpulse of 12/5/2017).

Bad weather has not stopped increase in employment

According to GUS data, corporate employment rose by 9.4k MoM in April vs. a 5.5k increase in March. Consequently, the annual dynamics of employment rose to 4.6% YoY in April vs. 4.5% in March. The annual dynamics of employment increased despite the adverse weather conditions limiting seasonal increase in employment (the average temperature in April 2016 was the lowest since 2003). It points to ongoing strong demand for labour in the Polish corporate sector. We expect a mild decrease of the annual employment growth in subsequent months as the improvement in the labour market will gradually slow down.

Wage fund data support our forecast of private consumption in Q2

We estimate that real wage fund dynamics (employment times average remuneration) in enterprises dropped to 6.7% YoY in April vs. 7.7% YoY in March. The decrease in real wage fund growth rate supports our forecast of private consumption dynamics in Q2 2017 (3.6% YoY vs. 4.1% in Q1 2017).

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