Strong increase in sales caused by last year’s low base effects

In accordance with the Polish Central Statistical Office's (GUS) data published today, nominal retail sales reported by businesses having more than 9 employees went up by 17.1% YoY in March comparing to a 2.7% drop in February, running markedly above the market consensus (10.9%) and our forecast (15.5%). Retail sales in constant prices increased by 15.2% YoY in March comparing to a drop by 3.1% in February. Seasonally-adjusted retail sales in constant prices fell by 2.0% in March comparing to February, which represents the strongest monthly decline since April 2020. We estimate seasonally-adjusted retail sales in March 2021 to have been by 1.5% lower than in February 2020, which means that retail sales volumes once again fell below the level observed just before the pandemic exerted its strong negative impact on households' expenses.

Sales once again strongly affected by restrictions

The significant monthly drop in seasonally-adjusted retail sales in constant prices between February and March resulted from administrative restrictions adopted in the second half of March in response to the third wave of the pandemic, involving closing the shopping malls and large furniture and home improvement stores. Moreover, taking into account a very strong increase in retail sales in February (see MACROpulse of 19/03/2021), it can be also assumed that bigger purchases that had been made earlier drove purchases down in March. Nonetheless, the data shows that the impact of restrictions that were in force in March 2021 on retail sales was much lower than the year before (see MACROmap of 19/04/2021). This is reflected by a strong YoY growth in sales in constant prices in a number of categories such as "textiles, clothing, footwear” (+93.0% YoY), “motor vehicles, motorcycles, parts” (+50.5% YoY), “furniture, electronic goods and household appliances” (+39.0% YoY) and “newspapers, books, other sales in specialised stores” (28.2% YoY).

Negative impact of restrictions on sales to continue in April

It can be expected that retail sales data for April will also be strongly impacted by administrative restrictions related to the third wave of the pandemic. This opinion is supported by stabilisation in terms of consumer sentiment in April comparing to March. According to the GUS data published today, the current consumer confidence indicator stood at -22.5 pts in April comparing to -23.0 pts in March, while the leading consumer confidence indicator stood at -19.8 pts vs. -20.2 pts. However, gradual decrease of the pandemic and the related easing of restrictions combined with the currently observed strong growth in real wage fund will be supporting retail sales in the months to come. Consequently, we expect the seasonally-adjusted retail sales in constant prices expressed to start growing MoM from May onwards.

Activity in the construction sector still well below the pre-pandemic level

In accordance with the data published by the GUS, the construction-assembly production shrank by 10.8% YoY in March vs. -16.9% in February, running below the market consensus (-9.4%) and our forecast (-9.1%). The construction-assembly production growth between February and March was driven up by statistical effects such as last year’s low base and a favourable difference in the number of working days (in February 2021, the number of those days was the same as in February 2020, while in March 2021 there was one working day more than in March 2020). We believe that the construction-assembly production growth between February and March was also boosted by the easing out the effect of a relatively harsh, against the historical backdrop, winter that prevented some of the construction works in February (see MACROpulse of 19/03/2021). Seasonally-adjusted construction-assembly production increased in March by 1.5% MoM. Consequently, construction-assembly production in March 2021 was lower by 15.7% than in February 2020, which was the last month when the domestic construction sector was not affected strongly by the pandemic.

Further signs of recovery in housing constructions sector

Construction-assembly production growth in March was driven up by higher production dynamics in the “construction of buildings” (-14.4% YoY in March vs. -24.1% in February) and “specialised construction activities” (-1.7% vs -13.1%), while lower production dynamics in the “civil engineering works” (-14.1% vs. -11.8%) had the opposite effect. Data on construction-assembly production and its structure are indicative of continuing low activity in the construction sector, which is primarily caused by a strong decline in public investments. We maintain our opinion, in which reduced activity in the construction sector will continue until H2 2021, when an increase in companies’ investments and acceleration in terms of public investments growth will contribute to a significant growth of construction-assembly production. Recovery in housing constructions will also enliven the activity in the entire construction sector in H2 2021. This opinion is supported by today’s data that are indicative of the continuous, strong growth in the number of construction permits over the last couple of months (53.1% YoY in March vs. 43.7% in February).

Slight upward risk for our GDP path

Today’s much-better-than-expected data on retail sales combined with industrial production data and the data on employment and average wages in the enterprise sector published this week (see MACROpulse of 21/04/2021) signal an upward risk for our GDP growth forecast for Q1 2021 (-1.5% YoY vs. -2.8% in Q4 2020) and the entire year 2021 (3.6% YoY vs. -2.7% in 2020). At the same time, we believe that today’s data on retail sales and construction-assembly production are slightly positive for the PLN and the yields on Polish bonds.

© 2024 Credit Agricole Bank Polska S.A. Wszelkie prawa zastrzeżone.

Menu o banku