Double-digit growth in nominal salaries

In accordance with the GUS data published today, the nominal salary growth in the sector of companies employing more than 9 employees accelerated from 9.9% YoY in April to 10.1% YoY in May, running slightly below the market consensus (10.2%) and slightly above our forecast (10.0%). In real terms, after adjusting for the changes in prices, salaries in companies rose by 5.2% YoY in May comparing to a 5.3% growth in April. Last year’s strong low base effects related to the outbreak of the pandemic were the main factor conducive to the continuing, quick growth in salaries. In turn, a statistical effect resulting from an unfavourable difference in the number of business days (in May 2021, there was one day less comparing to the preceding year, while in April 2021 and 2020 the number of business days was the same) had the opposite impact.

Low base effects boosted the employment growth

In accordance with the GUS data, the employment growth in the enterprise sector in May stood at 2.7% YoY comparing to 0.9% in April, which was above our forecast (2.5%) and market consensus (2.4%). Last year’s strong low base effects were the main factor driving the employment up in May comparing to April, just as it was the case with the salaries. In May 2020, the average employment fell by nearly 85k MoM. In monthly terms, in May 2021, the number of employed increased by 21.6k. According to the GUS, it resulted, among others, from employers hiring new employees, upward adjustments to working time bases to pre-pandemic levels, and reduced absence caused by employees’ taking sickness benefits and carer’s allowance. This was connected with the economy being gradually unfrozen in May following the April’s lockdown.

Labour market situation supports double-digit consumption growth

A stronger growth in the wages and employment combined with higher inflation in May (see MACROpulse of 15/06/2021) resulted in a strong increase in the real wage fund growth rate being the product of employment and average salary in the enterprise sector: from 6.3% in April and 3.3% in Q1 to 8.3% YoY. In May 2021, the real wage fund reported the fastest growth since February 2019. This data is consistent with our forecast assuming a double-digit consumption growth in Q2 2021 (11.2% YoY vs. 0.2% in Q1). In the months to come, the last year’s low base effects referred to above will be gradually fading, and therefore the employment and salary growth will slow down. Consequently, we expect the consumption to fall to 4.2% YoY on average in H2 2021.

Today’s data on salaries and employment in the enterprise sector have a slight positive impact on the PLN and the yields on bonds.

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