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Strongest real wage growth since 2007

Industrial production supported by favourable calendar effects

In accordance with the GUS data, industrial production sold in businesses employing more than 9 people increased by 1.6% YoY in January compared to a 3.5% YoY drop in December, running below the market consensus (3.1% YoY) and above our forecast (1.0%). Industrial production growth was largely driven by the statistical effect of a favourable difference in the number of working days between December and January (in December 2023, there were 2 more working days than in December 2022, while in January 2024 the number of working days was the same as in January 2023). In January, seasonally adjusted industrial production contracted by 0.2% MoM, marking the first decline since July 2023.

Production outlook in export industries remains grim

Due to the impact of favourable calendar effects, the growth in output was broad-based and was recorded across the three main industry segments, i.e. export-oriented sectors (0.8% in January vs. -5.2% in December), construction-related industries (-2.0% vs. -5.8%) and other categories (2.6% vs. -2.9%). Particularly noteworthy is the first year-on-year increase in production in export sectors since August 2023. However, we attribute this primarily to the aforementioned calendar effects, with the production outlook for this category remaining grim due to diminished manufacturing activity in the Eurozone, including Germany, and consequently lower demand for intermediate goods manufactured in Poland. Further information regarding the outlook for export-oriented sectors will be available in the upcoming publication of flash Eurozone PMIs for February scheduled for Thursday.

Strongest real wage growth since 2007

In accordance with the GUS data published today, nominal wage growth in the sector of businesses employing more than 9 employees increased to 12.8% YoY in January, up from 9.6% in December, running well-above the market consensus (11.0%) and our forecast (10.5%). This substantial nominal wage growth was broad-based, noted across most categories reported by GUS. In real terms, after adjusting for price changes, wages in businesses rose by 8.6% YoY in January vs. a 3.2% growth in December, marking the highest growth rate since August 2007. This sharp rise in real wages aligns with our consumption recovery scenario over the next quarters (see MACROmap of 05/02/2024).

Labour market affected by slowdown in economic growth

Employment growth in the business sector slowed to -0.2% YoY in January from -0.1% in December, aligning with the consensus and exceeding our forecast (-0.4%). Employment rose by 20.4k in January compared to December. The sharp increase in the number of jobs was driven by the annual revision of data on employment in micro-enterprises (employing up to 9 people). Companies whose headcount exceeded 9 employees were ‘added’ to the class of entities employing at least 10 people in January and thus were included in the population surveyed by the GUS. Thus, comparing the annual employment growth rate in January 2024 and December 2023 and, consequently, the wage fund’s growth rate (material for drawing conclusions about trends in household consumption expenditures), is not justified. A more comprehensive assessment of trends in employment will be possible after the release of data for February 2024. It is worth noting, however, that compared to the corresponding month of previous years, the increase in employment in MoM terms this January was the lowest since January 2014, excluding January 2021 (when a strong negative impact of the pandemic on employment in enterprises was recorded). In our opinion, this is attributable to the significant slowdown in economic growth in 2023.

GDP growth set to accelerate in Q1

We stand by our forecast that Poland's GDP growth rate will rise to 1.5% YoY in Q1 from 1.0% in Q4 (see MACROmap of 05/02/2024). Moreover, we believe that the overall impact of figures from the Polish economy released today is neutral for both the PLN exchange rate and yields on Polish bonds.