What else caught our eye:
- Unemployment rate has been confirmed at 5.6% in September (vs. 5.8% in August). We expect the downward trend to continue in October (to 5.5%).
- Flash CPI showed yet another surge in inflation (6.8% y/y in October vs. 5.9% in September), on core items and both fuel and energy prices. Acc. to our estimates core inflation jumped to 4.5-4.6% y/y.
- Economic sentiment improved in October acc. to the StatOffice’s synthetic indicator. In many sectors increasing problems with commodities and industrial supplies hamper economic expansion and lead to mounting inflationary pressure.
- The number of Poles living abroad decreased by 176k in 2020 marking the 3rd consecutive year of higher number of Poles coming back home than leaving the country. Reemigration increases the labour force and supports the consumption boom. The print has brought some controversies though, as the number may not reflect actual movements due to some brexit-related procedures.
The week ahead:
- We do not expect Moody’s to revise Poland’s credit rating today (A2 stable), despite fears that the European Commission may curtail some payments of EU funds to Poland.
- Manufacturing PMI likely declined again, driven by mounting supply pressure, as well as increasing prices of production components.
- MPC will likely hike interest rates by 50bp next week. The decision is a close call though, with high inflation suggesting aggressive hikes, and mounting GDP risks (pandemic, global slowdown) suggesting caution.
Number of the week:
- 47.6bn PLN – a (record) central budget surplus after September, vs. 40.5 bn deficit planned for the whole year.