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Industrial production still follows a strong upward trend

Sample revision boosts employment growth

In line with the data published by the GUS, the number of employees in the enterprise sector in January grew by 98.2k MoM. A strong growth in employment resulted from the annual revision of data on the number of employees in micro-enterprises (companies employing less than 10 people). Wherever the number of employees in a company increased beyond nine last year, such companies were added in January to the category of companies employing at least 10 people, and therefore they were included in the population surveyed by the GUS. January 2021 saw a decline in employment due to the COVID-19 pandemic. Therefore, it contributed to a strong acceleration of employment growth in the enterprise sector to 2.3% YoY in January 2022 vs. 0.5% in December 2021 as a result of base effects, which means that the employment growth rate stood above our forecast (1.5%) and the market consensus (1.9%).

In accordance with the GUS data published today, nominal wage growth rate in the sector of companies employing more than 9 employees fell from 11.2% YoY in December 2021 to 9.5% YoY in January 2022, running below our forecast (9.8%) and the market consensus (10.4%). In real terms, after the adjustments made to take into consideration the changes in prices, wages in companies rose by 0.3% YoY in January comparing to +2.4% in December. A significant decline in the average wage growth rate between December and January supports our opinion that we gave last month, which said that the strong acceleration of wage growth in December was caused by such factors as shifts in the dates of payment of variable remuneration components (bonuses and annual rewards were paid earlier in relation to the increasing tax progressivity in the wake of the adoption of the Polish Deal). The minimum pay rise effective from the beginning of 2022 had a negligent impact on wage growth in the enterprise sector.

Today’s labour market data has no impact on our forecast, in which the consumption growth will continue to be significant in Q1 2022 (7.0% YoY vs. 8.0% in Q4 2021). A strong consumption-related demand is likely to be confirmed by the data on retail sales in January, which will be published on Monday. Low base effects connected with the restrictions that were in force in Q1 2021 will also support the consumption growth. It will be possible to assess the trends in the labour market in more detail when the employment data for February is published, which will not be biased by the impact of the annual verification of categories of companies analysed by the GUS.

Industrial production still follows a strong upward trend

In accordance with the GUS data, the volume of industrial production sold in enterprises employing more than 9 people increased by 19.2% YoY in January 2022 compared to 16.7% in December 2021, running markedly above the market expectations (13.6%) and our forecast (12.9%). The increase in the dynamics is even more surprising as it took place despite the statistical effect of an unfavourable difference in the number of business days (in January 2022, the number of those days was the same as in 2021, while in December 2021 there was one day more comparing to December 2020). Seasonally-adjusted industrial production increased by 4.2% MoM in January, which was the highest monthly production growth since November 2021.

Production growth accelerated both in the export-oriented categories (12.2% YoY in January vs. 9.5%) and construction-related sectors (23.0% vs. 18.0%) and other industry categories (22.9% vs. 21.1%). That the growth was seen in many categories is a good news with regard to the durability of recovery in the Polish industry. It is worth noting that, next to the quick production growth in the industrial manufacturing sector (+15.6% YoY in January), good results were also reported in “mining and quarrying” (+32.6% YoY) and “electricity, gas, steam and air conditioning supply” (+51.6% YoY). In our opinion, the best testimony to the production growth scale is that the combined growth seen over the last three months (November 2021-January 2022) was stronger than the one reported for the twelve months preceding that period. We expect the barrier caused by bottlenecks in the production process to recede gradually, which will be beneficial for the Polish industry in the short- and mid-term perspective.

Good start of 2022

Today's labour market and industrial production data represents a slight upside risk to our forecast, in which Poland's GDP will grow by 4.4% YoY in Q1 2021. It will be possible to assess that risk more thoroughly after the publication of data on retail sales and construction and assembly production for January, which is planned for Monday.

In our opinion, the labour market and production data is slightly positive for the PLN and the yields on Polish bonds.