Retail sales accelerate again
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 7.4% YoY in July vs. a 5.3% increase in June, running below our forecast (8.0% YoY) and slightly above the market consensus (7.3%). The sales dynamics in constant prices increased to 5.7% in July vs. 3.7% in June.
Statistical effects boosted retail sales
The acceleration in retail sales in July resulted mainly from the statistical effect in the form of a favourable difference in the number of working days (in June the number of working days was 2 days lower from 2018 while in July 2019 it was higher by 1 day than the year before). In addition, the last year’s low base effects were supported by sales dynamics in the categories “food, beverages and tobacco products” (2.3% YoY in July vs. -1.5% in June) and “other retails sale in non-specialized stores” (11.4% vs. 9.3%). The acceleration in sales growth resulted also from their higher annual growth rate in the category “furniture, radio, tv and household appliances” (up to 15.9% YoY in July from 8.9% in June), which, in our view, was mainly caused by the last year’s low base effect (changed timing of shopping for radio and tv equipment, due to the FIFA World Cup in 2018).
On the other hand, the factor which slowed down retail sales growth were lower dynamics in the category “textile, clothing, footwear” (up by 1.3% YoY in July vs. a 12.9% increase in June). It resulted from the abatement of the effect of the postponement of shopping for summer clothing and footwear from May to June, due to extremely cold May.
Strong recovery in consumer demand continues
Today’s retail sales data confirm that the strong labour market, optimism of consumers, and payment of social transfers are conducive to households’ higher propensity to consume. This view is supported, first of all, by the increase recorded in recent months in the 6-month moving average for the annual sales dynamics in the categories covering durable goods: “furniture, radio, tv and household appliances” (up to 15.9% in July, the highest level since November 2012) and “motor vehicles, motorcycles and parts” (up to 9.8%). The source of the fast increase in private consumption was also the high growth of consumer credit (on the average equal to 8.5% YoY in H1 2019). It should be pointed out that strong consumer demand is also reflected by the results of GUS consumer surveys. The indicator of “current major purchases” was record high in July.
Today’s data do not alter our forecast, in which the growth rate of private consumption dropped to 4.5% YoY vs. 5.0% in Q2. We expect that strong consumer demand will also continue into Q4 2019, constituting the main driver of GDP growth in Poland.
Today’s reading of the July retail sales is neutral for PLN and the debt market, we believe.
