Opening up of the economy supports labor market

Data on wages above expectations

According to GUS data published today, the nominal wage growth rate in the sector of enterprises employing more than 9 employees stood at 9.8% YoY in June vs. 10.1% YoY in May, running above our forecast (9.6%) and the market consensus (9.3%). In real terms, adjusted for price changes, wages in the corporate sector grew by 5.1% YoY in June compared with a 5.2% increase in May. The factor contributing to the continued rapid growth of wages was the favorable difference in the number of working days (in May, their number was lower by one than in 2020, while in June it was the same as in the previous year).

Employment grows by another 20,000

According to GUS data, employment in the corporate sector grew by 2.8% YoY in June vs. 2.7% in May, above the market consensus which was consistent with our forecast (2.7%). In monthly terms, employment increased by 20.8k in June vs. an increase of 21.6k in May, which, according to the GUS press release, followed from new jobs in workplaces, return of FTE numbers to pre-pandemic levels, as well as lower absenteeism due carer’s and sick leaves. This phenomenon was associated with the last stage of opening up of the economy in the second half of May (e.g. opening up of sports facilities, restaurants, cultural facilities, students of primary and secondary schools going back to school). However, it should be noted that despite the strong increase in the number of jobs in recent months, employment in June was still lower by 87k than before the pandemic, i.e. in February 2020.

In Q2, real wage fund saw fastest growth since Q1 2019.

June saw the growth of the real wage fund (the product of employment and average wage) in the enterprise sector stabilize as it expanded by 8.1% YoY vs. 8.0% in May. Comparing Q1 with Q2, however, we noted that it surged from 1.2% YoY to 7.5%. Due to the impact of low base effects, in Q2 the real wage fund grew the fastest since Q1 2019. This data is consistent with our forecast of a double-digit consumption growth in Q2 (12.3% YoY vs. 0.2% in Q1). Household consumption, on top of the robust situation on the labor market, will be further supported by purchases made with the savings accumulated during the pandemic. In the following months, the said low base effects from a year ago will gradually fade and thus employment and wage growths will both slow down. As a result, we expect average growth of consumption to decline to 3.7% YoY in the second half of 2021.

The better-than-expected data on employment and wages in the corporate sector published today is slightly positive for the PLN exchange rate and bond yields.