In accordance with GUS data published today, nominal wage dynamics in the sector of enterprises employing more than 9 persons rose to 6.0% YoY in June vs. 5.4% in May, running significantly above our forecast (4.9%) and the market consensus (5.0%). Thus, it has reached the highest level since January 2012. In our view, the main factor behind the higher wage growth in the corporate sector was the changed timing of bonus payments rather than the increase in wage pressure related with the improvement in the labour market. Our view is supported by the results of the quarterly business survey (so-called "Quick Monitoring”) published today by the NBP. According to this report, the percentage of enterprises which recorded growing wage pressure has diminished in Q2 (to 15%). In accordance with the NBP survey, the inflow of immigrants and additional income related with the payments under the Familiy 500+ scheme are among the factors limiting the growing wage pressure. Therefore, we expect that the wage growth rate will run below 6% n the coming months but will remain within a weak upward trend.

In real terms, inflation-adjusted corporate wages increased by 4.4% YoY in June vs. 3.4% in May. Consequently, real corporate wage growth rate amounted to 3.3% in Q2 vs. 2.5% in Q1. A precise answer to the question which branches were responsible for the visible acceleration in the wage growth in June will be possible only after seeing the detailed data on wages to be published in the Statistical Bulletin.

Slower employment growth rate despite sharp increase in the number of jobs

According to GUS data, corporate employment rose by 11.1k MoM in June vs. a 0.7k decline in May. The annual employment dynamics dropped to 4.3% YoY in June from 4.5% in May. The slowdown of employment growth in June resulted from the high base effect from the year before (monthly employment growth in June 2016 was the highest since 2007, compared to the same month in previous years).

The slowdown in employment growth is consistent with the business surveys for manufacturing, as the PMI employment sub-index dropped in June – for a second month in a row - to 50.9 pts (the lowest level since August 2014) from 52.8 pts in May. Employment growth in June 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.

Labour market data are a good signal for consumption

We estimate that real wage fund dynamics (employment times average wages) in enterprises amounted to 8.9% YoY in June vs. 7.9% and 7.1% in Q2 and Q1, respectively. The visible acceleration in real wage fund in Q2 compared to Q1 poses an upside risk to our forecast, in which real dynamics of private consumption will drop to 4.2% in Q2 vs. 4.7% in Q1. Today's data from the labour market is, in our opinion, slightly positive for PLN and yields on Polish bonds.

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