Solid data from labour market supported consumption in Q2

Wage growth surprised to the upside

In accordance with GUS data published today, nominal wage dynamics in the sector of enterprises employing more than 9 persons rose to 7.5% YoY in June from 7.0% in May, running above our forecast equal to the market consensus (7.0%). Real, adjusted for the changes in prices, corporate wages rose by 5.4% YoY in June vs. 5.2% in May. Conducive to higher wage dynamics in June were pay rises in Jastrzębska Spółka Węglowa. Wage growth was also supported by statistical factors related to a favourable difference in the number of working days, which boosted wage dynamics of employees doing piecework. We maintain our view that the annual wage growth supported by moderate wage pressure in several industries will stand between 7% and 8% in subsequent months.

Stabilization of wage growth

According to GUS data, corporate sector employment rose by 11.9k MoM in June vs. a 2.1k decrease in May. This means that, as we expected, the decline in monthly employment recorded in May was temporary (see MACROpulse of 18/6/2018).The annual employment growth has not changed in June compared to May and amounted to 3.7%. The higher from our forecast (by 0.1 pp) employment growth in June was consistent with the better-than-expected business surveys in manufacturing. The PMI employment sub-index hit in June the highest level since April 2017. The ongoing relatively fast employment increase is especially interesting from the point of view of the growing difficulties of companies in finding skilled labour. In our view, employment increase is boosted by gradual acceleration in real wage growth, supporting return to the labour market of so-far economically inactive persons as well as growing registered employment of immigrants from Ukraine. Faster-than-expected increase in FTEs in June does not alter our scenario of gradual deceleration of employment growth in the coming quarters.

Solid data from labour market supported consumption in Q2

We estimate that the real wage fund growth rate (employment times average wages) amounted to 9.3% YoY in June vs. 9.0% in May. Real wage growth accelerated to 9.5% in Q2 vs. 9.3% in Q1. This poses a slight upside risk to our forecast, in which private consumption growth in Q2 will decrease and will amount to 4.9% YoY vs. 5.2% in Q1.

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