Lower bonuses limited wage growth

In accordance with GUS data published today, nominal wage dynamics in the sector of enterprises employing more than 9 persons dropped to 4.0% YoY in February vs. 4.3% in January 2016, running in line with the market consensus and slightly below our forecast (4.1%). Conducive to lower wage growth was the postponement of the payment of additional annual bonus in mining (so-called "fourteenth salary”) from February to March (i.a. in Katowicki Holding Węglowy). The decrease in nominal wage dynamics between January and February was also due to an unfavourable difference in the number of working days (in January 2017 the number of working days was higher by two days than in 2016, while in February 2017 it was lower by one day than the year before), reducing the dynamics of piecework pay.

Real, price-adjusted corporate wages increased by 1.8% YoY in February vs. 2.5% in January, due to slower growth of nominal wages and higher CPI inflation (2.2% YoY vs. 1.7% in January, see MACROpulse of 14/2/2017). In subsequent months we expect only a moderate acceleration in nominal wage growth rate and we estimate the likelihood of secondary effects caused by increase in inflation (so called second-round effects) as low (see MACROmap of 20/2/2017).

High increase in employment in February

According to GUS data, the annual dynamics of employment rose to 4.6% YoY in February vs. 4.5% in January. Employment increased by 16.5k MoM in February vs. a 160.8k increase in January. We forecast that annual employment growth will stabilize at ca. 4.5% in subsequent months, as the improvement in the labour market will gradually slow down.

Solid data from labour market supportive for consumption in Q1

We estimate that the growth rate of the real wage fund (employment times average remuneration) in enterprises amounted to 6.5% YoY in February vs. 7.1% YoY in January. Nevertheless, we see an upside risk to our forecast of lower private consumption dynamics in Q1 2017 (3.6% YoY vs. 4.2% in Q4 2016). A fuller assessment of Q1 consumption prospects will be possible after tomorrow's reading of retail sales in February.

Today's data from the labour market are, in our opinion, neutral for PLN and yields on Polish bonds.

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