TOP MACRO THEME(S):
- A soft-landing scenario – we summarize our mid-term (2023-24) forecasts report in which we have revised upwards GDP growth, current account balance and wages and confirmed our expectations for strong disinflation in 2023 and the beginning of interest rates cuts before the year-end.
WHAT ELSE CAUGHT OUR EYE:
- Monthly data for May confirmed that economic activity in Poland kept falling in y/y terms but at a slower rate than in April. Industrial output declined by 3.2% y/y vs. -6.4% y/y a month before. Output decline was observed among majority of branches, with the most notable decline in intermediate goods, while export-oriented sectors kept growing. The period of the deepest declines in the industry is probably over. Construction and assembly output decreased by 0.7% y/y in May after a slight increase in April. High interest rates still weaken the building construction segment (-12.2% y/y), while civil engineering remains relatively immune to the slowdown, taking advantage of the final year of the EU financing perspective (+9.1% y/y).
- Real retail sales in May fell by 6.8% y/y. The real decline in sales eased from -7.3% y/y in April, at the same time the dynamics of nominal sales deteriorated (to +1.8% y/y from +3.4% y/y). A decline in deflator supported real sales results. According to our estimates, the deflator has turned single digit in May, for the first time since February 2020.
- The average wage in the enterprise sector in May increased by 12.2% y/y. The growth rate was slightly higher than in April (12.1% y/y), but weaker than expected. In real terms. wages declined again, however the turning point is approaching (in our view real wages might turn positive in September). This will likely boost consumer spending in 2h23.
THE WEEK AHEAD:
- Registered unemployment in May probably inched down to 5.1% from 5.2%. • In June a strong CPI disinflation has likely continued, at a pace close to what we have seen in May.
NUMBER OF THE WEEK:
- -1.7% – for the first time since October 2020 producer prices in manufacturing declined in y/y terms.