Retail sales much above the pre-pandemic level for the first time
In accordance with the GUS data published today, nominal retail sales reported by businesses having more than 9 employees went up by 19.1% YoY in May comparing to a 25.7% growth in April, running above the market consensus (16.0%), which was consistent with our forecast. Retail sales in constant prices increased by 13.9% YoY in May comparing to an increase of 21.1% in April. Just as it was the case with the industrial production (see MACROpulse of 21/06/2021), the last year’s low base effect, which was weaker comparing to April, was the main reason behind a strong decline in retail sales dynamics between April and May. A trade recovery seen in May 2021 in connection with the lifting of sales restrictions affecting shopping malls and large furniture and home improvement stores (an 8.4% MoM growth in nominal sales) was weaker than in May 2020, when a 14.5% MoM growth had been reported. This is consistent with our scenario in which the so-called pent-up demand has a limited impact on the retail sales of goods in the context of a significant growth in the share of online sales seen after the outbreak of the pandemic and of an increased mobility of households. Seasonally-adjusted retail sales in constant prices in May was 3.0% higher than in February 2020, which was the last month when the sales were not materially affected by the pandemic. This means that this year’s May was the first month to see the retail sales go up much above the level reported before the outbreak of the pandemic. We expect the annual retail sales growth to slow down due to the fading effects of the last year’s base in the months to come, and the wage fund dynamics will be the main factor driving the sales up.
The boom in the construction sector is getting bigger
In accordance with the data published by the GUS, the construction-assembly production increased by 4.7% YoY in May vs. a 4.2% drop in April, running above the market consensus (1.2%) and our forecast (1.0%). A strong year-on-year construction-assembly production growth between April and May resulted from a combination of such factors as the last year’s low base effect favouring production growth, statistical effects 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 the number of business days was the same) and the accelerating recovery in the construction sector. Seasonally-adjusted construction-assembly production increased in May by 3.5% MoM. This means that May was the third consecutive month to see a significant activity increase in the construction sector. Nonetheless, the construction-assembly production in May was still much lower than in February 2020 (by 6.4%). The May’s data on the construction-assembly production suggest that the boom in the construction sector is getting bigger (see MACROpulse of 21/05/2021). This assessment is supported by the number of dwellings for which permits were granted, which is growing very quickly and on a continuous basis (53.5% YoY vs. 62.0% in April), and of the dwellings in which construction began (92.4% YoY, same as in April). Furthermore, a strong production growth in units specialising in civil engineering seen in May (+4.7% YoY vs. -11.1% in April) is indicative of growing investment activity in the public sector.
Today’s data on retail sales and construction-assembly production combined with yesterday’s data on the industrial production in May are indicative of an upside risk for our GDP growth forecast for Q2 (11.2% YoY), and they are slightly positive for the PLN and the yields on bonds.