In accordance with GUS data published today, nominal wage dynamics in the sector of enterprises employing more than 9 persons rose to 5.4% YoY in May vs. 4.1% in April, running above our forecast (4.7%) and the market consensus (4.9%). Thus, nominal wage growth rate has reached the highest level since January 2012. In real terms, inflation-adjusted corporate wages dynamics increased to 3.4% YoY in May vs. 2.0% in April.

Conducive to higher wage growth in May were low base effects from the year before, i.a. in the categories "manufacture of coke and refined petroleum products” and "construction”. Noteworthy is that detailed data on the structure of wages in April (published in the Statistical Bulletin) confirmed our earlier expectations that lower wage dynamics in April occurred mainly due to: the abatement of the effect of bonuses paid in mining, high base effect in the category "retail trade” and unfavourable calendar effects (see MACROpules of 18/5/2017). At the same time, a significant acceleration of annual wage dynamics was recorded in numerous categories. In our view, it points to a growing wage pressure. Today's data also confirms such tendency. We expect that the annual nominal wage dynamics in the corporate sector will run at a level of ca. 5.0% in the coming months, which will be in line with its short-term trend.

Slightly lower employment growth rate

According to GUS data, corporate employment declined by 0.7k MoM in May vs. a 9.4k increase in April. As the result, the annual employment dynamics dropped to 4.5% YoY in May vs. 4.6% in April. The slowdown of employment growth is consistent with the business surveys for manufacturing, as the PMI employment sub-index dropped to 52.8 pts in May (the lowest level since October 2016) from 54.8 pts in April. Employment growth in May was limited by the growing difficulties of companies in finding skilled labour. According to GUS business surveys, the share of manufacturing companies reporting such difficulties in Q2 has been the highest in the survey history. We expect a slight decrease of the annual employment growth in subsequent months as the improvement in the labour market will gradually slow down.

We estimate that real wage fund dynamics (employment times average wages) in enterprises amounted to 8.1% YoY in May vs. 6.7% in April and 7.1% in Q1. Today's data poses a slight upside risk to our forecast of private consumption dynamics in Q2 (4.2% YoY vs. 4.7% in Q1).

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

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