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The fastest growth of wage fund since September 2008

Wages surge in August

In accordance with GUS data published today, nominal wage dynamics in the sector of enterprises employing more than 9 persons rose to 6.6% YoY in August vs. 4.9% in July, running markedly above our forecast equal to the market consensus (5.7%). At the same time, it has been the highest wage dynamics since January 2012. In our view, the acceleration in the wage growth rate in August was largely due to the low base effects from the year before resulting from changed timing of bonuses paid in mining.

Employment growth rate continues to accelerate

According to GUS data, corporate employment rose by 3.5k MoM in August vs. a 20.6k increase in July. Consequently, the annual employment dynamics rose to 4.6% in August vs. 4.5% in July. The factor behind higher employment growth rate were the low base effects from the year before in the sector "information and communication” resulting from the transfer of some persons employed in this sector to branches not covered by corporate sector statistics (see MACROpulse of 18/10/2017).

The wage growth rate continues to increase despite the growing difficulties of companies in finding skilled labour. However, in subsequent quarters we expect deceleration of the improvement in the labour market and slight decline in the annual employment dynamics. Given the continuing strong demand for labour, it will be conducive to a gradual increase in wage pressure in the Polish economy. We forecast that the wage growth rate in the national economy will increase to 5.2% YoY in 2017 vs. 3.8% in 2016 and will reach 6.5% in 2018 (see MACROmap of 11/9/2017).

The fastest growth of wage fund since September 2008

We estimate that real wage fund dynamics (employment times average wages) in enterprises amounted to 9.6% YoY in August vs. 7.8% in July and 7.9% in Q2. At the same time, it has been its highest growth rate since September 2008. This poses a slight upside risk to our forecast in which private consumption growth will drop to 4.2% YoY in Q3 vs. 4.9% in Q2. We also believe that in subsequent quarters private consumption growth will continue to stay at a level of 4.0% YoY or higher despite the abatement of the positive impact of the 500+ scheme on the annual consumption dynamics. This will be the effect of the improving situation in the labour market (including the expected by us faster growth of real wages), high households' propensity to use the accumulated savings to pay for current expenses, as well as the reduction of the retirement age (see MACROmap of 11/9/2017).

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