TOP MACRO THEME(S):
- Profitable enough?: Net financial result of Polish corporates was record high in 1q22, but not without caveats. Massive inventory hoarding builds up a ‘bubble’ that may burst should unfavorable business conditions occur. Also, elevated profits have not triggered an extra investment demand so far. WHAT
ELSE CAUGHT OUR EYE:
- A whopping 19% growth of retail sales in April (in real terms) signals that a sort of dualism in consumer sector in Poland is likely to develop in the near future. Gloomy consumer sentiment, indicative of a downbeat domestic consumer spending, has been more than offset by spending of refugees so far.
- Unemployment rate dropped to 5.2% on a falling number of unemployed and a substantial revision in the number of employed people (Poland Statistics has most likely included a substantial portion of refugees in estimates). Meanwhile, the LFS unemployment rate in 1q22 rose to 3.1% (+0.2pp q/q and -0.9pp y/y), while the participation ratio in the working age population (18-59/64) rose to all-time high of 80%.
- Construction sector activity cooled down in April amid stalled civil engineering works awaiting for the Domestic Recovery Plan (KPO) kick-off.
THE WEEK AHEAD:
- Detailed GDP figures for 1q22 will be revealed on Tuesday. We bet on a strong consumption (PKOe: 6.7%) and moderate investment growth (PKOe: 5.0%). Inventory build-up also likely contributed much to GDP growth.
- CPI inflation in May (flash estimate) went up again (likely above 13% y/y), this time mainly on fuel prices, but price pressures remained broad-based.
- Manufacturing PMI for May barely changed on our early estimates - lower output and orders have been likely offset by rising delivery times (supply bottlenecks).
NUMBER OF THE WEEK:
- 9.2 bn PLN – state budget surplus after April, a signal that the Anti-Inflationary Shield (de facto a reversal of ‘inflation’ tax) doesn’t hurt public finances much.