Subsequent solid retail sales data

In accordance with the Polish Central Statistical Office's (GUS) data that have been released today, retail sales in enterprises employing more than 9 people increased in current prices by 9.0% YoY in August vs. a 9.3% increase in July, running in line with our forecast equal to the market consensus. The sales growth rate in constant prices dropped to 6.7% in August vs. 7.1% YoY in July.

New emission standards failed to boost sales growth

Lower real retail sales dynamics in August resulted from slower sales growth in the category "motor vehicles, motorcycles, parts” (down to 11.0% YoY vs 16.7% in July). The deceleration of growth in this category is surprising in view of numerous media reports pointing to a sharp increase in the number of new cars registered in July and August, boosted by the entry into force of new emission standards from 1 September 2018. Today's GUS data suggest that the increase recorded in August in the number of registered vehicles was – like in July – mainly the effect of the registration made by dealers not included by GUS in the August retail sales.

Noteworthy in the August sales structure is also the acceleration in sales growth in the categories "food, beverages, and tobacco products” (up to 1.0% YoY vs. a 0.6% decrease in July) and "other retail sales in non-specialized stores”, which also include hypermarkets (up to 6.9% YoY from 4.2%). This is in line with our view from the month before that the deceleration in the annual sales dynamics in these categories was an outlier and that the dynamics will increase again in subsequent months (see MACROpulse of 22/8/2018).

Sales boosted by loans...

The marked acceleration in real sales growth in the category "furniture, radio, TV, and household appliances” (9.1% YoY vs. 4.4% in July) is also worth noting. The 3-month average sales dynamics in this category amounted to 9.3% YoY, hitting the highest level since February 2018. Sales in this category are supported by households' high propensity to acquire durable goods, backed by the very good situation in the labour market. This is reflected by the results of the GUS September survey of consumer sentiment, in which the indicator of "current important purchases” was record high. Sales in this category are additionally supported by fast increase in lending in the segment of consumer loans – their annual dynamics (excluding overdraft and credit card-related facilities) amounted to 11.0% YoY in July and was the highest since January 2010.

... and 300+

Today's reading of retail sales in August supports our forecast of consumption in Q3 (4.8% YoY vs. 4.9% in Q2). Private consumption in Q3 and Q4 will be additionally boosted by disbursements under the "Good Start” scheme (PLN 300 per child). We estimate that they will increase the annual consumption growth in those quarters by 0.2 pp. The acceleration in real wage fund growth (see MACROpulse of 18/9/2018), resulting from lower inflation, will boost private consumption in Q4. Consequently, despite the last year's high base effect, the annual consumption dynamics in Q4 will decrease slightly compared to Q3 (by 0.1 pp).

In our view, today's reading of the August retail sales is neutral for PLN and bond yields.

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