Lower wage dynamics in September

In accordance with GUS data published today, nominal wage dynamics in the sector of enterprises employing more than 9 persons dropped to 6.0% YoY in September vs. 6.6% in August, running below our forecast (6.9%) and the market consensus (6.2%). Negative for the wage growth rate was the unfavourable difference in the number of working days (in August 2017 the number of working days was the same as in 2016 while in September 2017 it was 1 day lower than the year before), which reduced the growth rate of wages for piece work. Wage growth rate slowed down in September despite bonuses paid in mining (i.a. in Jastrzębska Spółka Węglowa) and pay rise in the segment "manufacture of coke and refined petroleum products” (i.a in the Lotos company).

Slight slowdown in employment growth rate

According to GUS data, corporate employment rose by 5.2k MoM in September vs. a 3.5k increase in August. Consequently, the annual employment dynamics dropped to 4.5% in September vs. 4.6% in August. The factor behind lower employment growth rate were the high base effects from the year before (see MACROpulse of 18/10/2016). In subsequent quarters we expect deceleration of the improvement in the labour market and a slight decline in the annual employment dynamics. Given the continuing strong demand for labour, it will be conducive to a gradual increase in wage pressure in the Polish economy. This view is supported by results of the NBP quarterly business survey (so-called Quick Monitoring) published this week, which pointed to higher percentage of companies recording increasing wage pressure. We forecast that the wage growth rate in the national economy will increase to 5.2% YoY in 2017 vs. 3.8% in 2016 and will reach 6.5% in 2018 (see MACROmap of 11/9/2017).

Continuing wage fund growth supports consumption dynamics

We estimate that real wage fund growth rate (employment times average wages) in enterprises amounted to 8.4% YoY in September vs. 9.6% in August. Consequently, in the whole Q3 it rose to 8.6% YoY vs. 7.9% in Q2. This poses a slight upside risk to our forecast in which private consumption growth will drop to 4.2% YoY in Q3 vs. 4.9% in Q2, due to the high base effects from the year before related to the launch of the Family 500+ scheme.

Today's data on corporate wages and employment are neutral for PLN and yields on bonds, we believe.

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