Surprisingly high wage growth rate in January

In accordance with GUS data published today, nominal wage dynamics in the sector of enterprises employing more than 9 persons have not changed compared to December and amounted to 7.3% YoY, running above our forecast (6.2%) and the market consensus (6.9%). Real, adjusted for the changes in prices, corporate wages rose by 5.3% YoY in January vs. 5.1% in December. The stabilization of wage growth in January is highly surprising considering the numerous factors contributing towards its marked decline: the abatement of the effect related to the variable components of remuneration paid out in mining, smaller than last year increase in minimum wage (in 2017 it was increased by 8.1%, whereas in 2018 it rose by 5.0%), and the review of the sample of enterprises (see below), supporting a decrease in the average corporate wage. Therefore, we interpret today's data as yet another confirmation of the growing wage pressure in the economy, signaled i.a. by the NBP business surveys (a visible increase in the percentage of companies recording wage pressure in Q4 2017). An important signal of increasingly stronger wage pressure are the data published last week on remuneration in the national economy in Q4 (7.1% YoY), whose dynamics were clearly higher from our forecast (5.9%). However, we do not rule out that the annual wage growth in January was temporarily boosted by variable components of remuneration paid out both in mining and in manufacturing. A fuller assessment of the surprisingly high wage growth in January will be possible after the publication by GUS of data on wages in the respective segments of the corporate sector.

Sample review increased employment

According to GUS data, the dynamics of corporate sector employment amounted to 3.8% YoY in January vs. 4.5% in December, which was above our forecast (3.5%) and the market consensus (3.4%). On a monthly basis, employment increased by 121.8k. The sharp monthly employment growth was caused by the annual review of data on employment in microenterprises (employing no more than 9 persons). Companies, where employment exceeded 9 persons last year, were added in January to the class of units employing at least 10 persons. The scale of the review in January 2018 was lower than the year before (when it was the biggest in history), which was conducive to lower annual wage growth rate. In subsequent quarters we expect a gradual slowdown of the improvement in the labour market and a mild reduction of the annual employment growth, both in the corporate sector and in the entire economy (see MACROmap of 5/2/2018). Employment growth will slow down despite the expected by us increase in public and private investments whose potentially positive impact on employment will be limited by the growing difficulties of companies in finding skilled labour.

Fast wage growth supported consumption

We estimate that the growth rate of the real wage fund (employment times average remuneration) in enterprises amounted to 9.3% YoY in January vs. 9.9% YoY in December 2017 and 9.4% in Q4 2017. Due to the said review of data on employment in microenterprises, the data on real wage fund dynamics in December 2017 and January 2018 are not fully comparable. A fuller assessment of trends concerning the real wage fund will be possible in March after the release of the February data on employment and wages. The surprisingly high real wage growth in January and the above-mentioned sharp increase in wage growth in the national economy in Q4 support our forecast of higher private consumption growth in Q1 2018 (5.2% YoY vs. 4.8% in Q4 2017).

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