Highest nominal sales growth since April 2021
In accordance with the GUS data published today, nominal retail sales reported by businesses having more than 9 employees went up by 21.2% YoY in November compared to a 14.4% growth in October, running markedly above the market consensus (16.8%) and our forecast (18.8%). Retail sales in constant prices grew by 12.1% YoY in November vs. 6.9% in October. The continuing, strong growth in prices hampered the real retail sales growth. Retail sales deflator went up from 7.0% YoY in October to 8.1% YoY in November, reaching the highest level in the recorded history. Seasonally-adjusted retail sales in constant prices grew by 2.5% MoM in November (the highest growth since May 2021), reaching a level 6.6% higher than in February 2020, which was the last month in which sales were not materially affected by the COVID-19 pandemic.
“Black Friday” supports retail trade turnover
Total sales were mainly driven up by a quicker growth in “textiles, clothing, footwear” (55.8% YoY in November vs. 29.3% in October), “furniture, electronic goods and household appliances” (10.3% vs. 0.2%), “pharmaceuticals, cosmetics, orthopaedic equipment” (18.2% vs. 6.1%) and “other” (23.8% vs. 13.2%) categories. Low base effect related to the closing of shopping malls in November 2020 due to restrictions adopted at that time increased the sales dynamics in those categories. Furthermore, the impact of customers preparing themselves for Christmas ahead of the holiday period (i.e. in November) also might have been positive for sales. It could also have been supported by the growing popularity of the so-called “Black Friday” shopping, with Black Friday falling on 26 November this year. It is also worth noting that shopping was often done online due to the COVID-19 pandemic spread in November. In accordance with the data provided by the GUS, the share of total online sales stood at 11.4%, reaching the highest level since November 2020.Given the non-recurring nature of the factors that supported sales in November, we believe that the growth will slow down in December again. This trend will be consistent with gradual deterioration in consumer sentiment seen in the last couple of months.
Very good construction and assembly production data
In accordance with the data published by the GUS, the construction and assembly production increased by 12.7% YoY in November compared to a 4.2% growth in October, running markedly above the market consensus (6.0%) and our forecast (8.0%). The main reason behind the acceleration of the industrial production growth between October and November was the statistical effect of a favourable difference in the number of business days (in October 2020, there was one business day more than this year, while in November 2021 the number of those days was the same as the year before). Seasonally-adjusted construction and assembly production increased by 3.6% MoM in November, which was the highest monthly growth since April 2021. Nonetheless, we assess that the construction and assembly production level in November was still 3.2% lower than in the period before the outbreak of the pandemic (i.e. February 2020).
Activity increase in the construction sector was seen across many categories. A two-digit growth was reported in each of the three main segments: 10.4% YoY in November vs. 3.0% in October in “civil engineering works”, 17.1% vs. 12.7% in “specialised construction activities” and 12.6% vs. -0.6% in “construction of buildings”. Today’s data supports our scenario in which we will see the continuation of recovery in the construction sector in the quarters to come. However, the developments in public investments due to the approval of the National Recovery Plan having been postponed by the European Commission remain a significant risk factor for our scenario.
Significant upside risk to our GDP forecast for Q4 and 2021.
Today’s data on retail sales and construction and assembly production combined with yesterday’s data on industrial production (see MACROpulse of 20/12/2021) carry an upside risk for our forecast, in which the Polish GDP in Q4 2021 will increase by 5.5% YoY compared to a 5.3% increase in Q3, and thus also for the average annual economic growth forecast for 2021 (5.2%). At the same time, today’s data is slightly positive for the PLN and the yields on Polish bonds.