Statistical effects supported the retail sales growth

Retail sales higher than expected

In accordance with the Polish Central Statistical Office's (GUS) data that have been released today, retail sales in enterprises employing more than 9 people increased in current prices by 7.6% YoY in May vs. a 4.6% increase in April, running above the market consensus (6.6%) and below our forecast (8.8%). The sales growth rate in constant prices went up from 4.0% YoY in April to 6.1% in May.

Statistical effects supported the retail sales growth

Acceleration of real retail sales growth resulted primarily from higher dynamics of sales in the categories "food, beverages and tobacco” (2.8% YoY in May vs -10.4% in April) and "retail sales in non-specialist stores” (7.8% in May vs -1.9% in April). The significant acceleration of retail sales growth in these categories resulted primarily from the abatement of the negative effect of Easter falling on an earlier date than in the previous year. In 2018 the pre-Easter shopping season took place in the last two weeks of March, while in 2017 it took place in the first two weeks of April, which resulted in a significant slowdown of sales growth in April 2018. A lower number of Sundays to which the ban on trading applied in comparison to the previous month (2 Sundays in May vs 4 Sundays in April) was another factor that had a positive impact on the retail sales growth rate in May.

Sources of strong retail sales growth are running out

In the next few months we expect a moderate slowdown in sales, due to the expected by us increasingly slow employment growth, which, amid limited wage pressure (see MACROmap of 21/5/2018) and temporarily higher inflation related mainly to higher growth of fuel prices, will be conducive to a gradual slowdown of real wage fund growth. Our scenario is supported by the results of the June consumer sentiment survey released yesterday by GUS. They indicate that the annual increase of the Leading Indicator of Consumer Confidence is increasingly slower, given that it amounted to 1.3 pts YoY in June vs. 2.8 pts. in May, the smallest annual growth since July 2013. Considering the tendencies in the labour market, any further significant improvement of consumer sentiment (which is very good anyway) is unlikely, we believe.

In our view, today's higher than expected reading of the May retail sales is slightly positive for PLN and bond yields.