Zgubienie karty
(koszt wg stawki operatora) +48 71 354 90 09
Aktualności

Beginning of the year not good for retail sales and construction

Strong decline in retail sales at the beginning of the year

According to the Central Statistical Office (GUS) data released today, nominal retail sales in enterprises employing more than 9 people fell by 6.0% YoY in January, vs. a 0.8% drop in December, which was below market consensus (-5.0%) and above our forecast (-6.5%). The sales growth rate in constant prices dropped in January to -6.0% YoY vs. -0.8% in December. This means that real retail sales growth rate has been equal to the nominal one for the third month in a row. Seasonally adjusted retail sales in constant prices were 1.8% lower in January vs. December. We estimate that the seasonally adjusted level of retail sales was 4.2% lower in January than in February 2020, when the pandemic had not yet had a strong negative impact on household spending.

Retail sales strongly influenced by restrictions

The main reason for the strong decline in retail sales growth rate between December and January was the tightening of administrative restrictions to limit new COVID-19 cases, including in particular the closure of shopping malls from 28 December 2020. The decision to close shopping malls was communicated well in advance, hence we believe that some consumers shifted their January shopping to December, encouraged also by numerous price cuts introduced by shops (see MACROpulse of 22/01/2021), which further favoured such decisions. The effect of shopping mall closures was primarily reflected in a strong decline in real sales growth rate in the category of "textiles, clothing, footwear” (-40.8% YoY in January vs. -10.9% in December). Also noteworthy in the data is a marked deepening of the decline in sales in the "solid, liquid and gaseous fuels" category (-16.4% YoY vs. -10.3%). In our view, this is the result of the reduced mobility of the population given the tighter administrative restrictions, in particular hotel closures and the decision that winter holidays for all students would take place at the same time (reduced travel in January, holidays and remote working due to the need to care for children during school-free days). We believe that the cold and snowy winter, which limited the shopping activity of some consumers, probably also had a negative impact on retail sales growth rate. Interestingly, an increase in retail sales growth was recorded in the "furniture, consumer electronics, household appliances" category (7.1% vs. 3.5%). This indicates continued strong consumer demand for durable goods. It is worth noting that this was the only category in which sales increased in January on an annual basis.

Significant decline in construction activity

According to the Central Statistical Office (GUS), construction and assembly production decreased by 10.0% YoY in January vs. a 3.4% increase in December, which was below market consensus (-7.3%) and above our forecast (-11.9%). The main reason for the decline in construction and assembly production growth rate between December and January was the abatement of the low base effect, which had significantly boosted construction and assembly production growth rate in December last year (December 2019 saw a relatively strong MoM decline in production - see MACROpulse of 22/1/2021). The unfavourable difference in the number of working days (in December last year it was 1 more than in 2019, while in January this year it was 2 less than in 2020) also had an impact on the decline in the growth rate of construction and assembly production. The growth rate of construction and assembly production in January was also negatively affected by low temperatures and snow cover, which made it impossible to carry out some construction work. Seasonally adjusted construction and assembly production declined in January by 1.7% MoM. We estimate that the January level of construction and assembly production was 11.3% lower than in February last year.

Reduced construction activity will persist into H2 2021

The decrease in the construction and assembly production growth rate in January was recorded in all sections of the construction industry: "construction of civil engineering facilities" (-5.0% YoY vs. -1.0% YoY in December), "construction of buildings" (-14.4% vs. 4.1%) and "specialised construction" (-10.1% vs. 12.0%). This confirms our assessment from a month ago that the increase in production growth rate recorded in December in the three above-mentioned activities was temporary. The data on construction and assembly production and its structure indicates continued low activity in the construction industry, which is mainly due to a strong decline in investment by enterprises. We maintain our assessment that the reduced activity in construction will persist until H2 2021, when the recovery in investment by enterprises and the acceleration in public investment will contribute to a marked increase in construction and assembly production. What supports our scenario is the persistently low, compared to the pre-pandemic period, GUS business sentiment indicator showing the domestic orders portfolio of construction companies.

Further data confirms upward risks to Q1 GDP growth rate

Today's better-than-expected retail sales and construction and assembly production data, combined with this week's industrial production, and employment and average wages data in the sector of enterprises, signal upside risk to our Q1 GDP forecast (-1.0% YoY vs. -2.8% in Q4 2020). Upside risk to our forecasts is also indicated by preliminary PMIs for major Eurozone economies published today, which have confirmed continued high activity in German manufacturing, which will support Polish exports in the coming months. We will discuss this topic in more detail in the upcoming MACROmap.

Today's weaker-than-market consensus data on retail sales and construction and assembly production is slightly negative for the PLN and Polish bond yields.