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Calendar effects have temporarily slowed down retail sales

Retail sales came below our expectations

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 5.3% YoY in June vs. a 7.3% increase in May, running below our forecast (6.0% YoY) and above the market consensus (4.9%). The sales dynamics in constant prices decreased to 3.7% in June vs. 5.6% in May.

Calendar effects limited sales growth

The slowdown of retail sales in June was wide ranging – a decrease in the annual growth rate compared to May was recorded in all the categories, except for “fuels” and “textile, clothing, footwear”. In our view it should be attributed to the statistical effect in the form of an unfavourable difference in the number of working days (in May the number of working days was 1 day higher from 2018 while in June 2019 it was lower by 2 days than the year before). A particularly sharp slowdown of real retail sales dynamics was recorded for the category “motor vehicles, motorcycles, parts” (5.1% YoY in June vs. 16.6% in May). It resulted mainly from the last year’s high base effect.

The factor which accelerated retail sales growth were higher dynamics in the category “textile, clothing, footwear” (up by 12.9% in June vs. a 0.1% decrease in May).They resulted from the postponement of shopping for summer clothing and footwear from May to June, due to extremely (compared to last few years) cold May.

Sharp increase in consumption in Q2

We expect that - as the calendar effects abate - the retail sales growth rate will remain high in the coming months, supported by strong labour market, optimism of consumers, and payment of social transfers. It should be pointed out that according to the GUS business surveys the assessment of future (in the next 12 months) household’s financial situation is currently record high.

The average retail sales dynamics in constant prices rose to 7.1% YoY in Q2 vs. 4.5% in Q1. Today’s data support our forecast, in which the growth rate of private consumption rose to 5.0% YoY in Q2 vs. 3.9% in Q1.

Today’s data on the June retail sales are neutral for PLN and the debt market, we believe.