TOP MACRO THEME(S):
- Unemployment at the bottom: Unemployment rate in June was the lowest on record (4.9%) and, as the domestic labour supply is set to shrink, will stay low for longer.
- Inflation plateau: Inflation rate in July remained at 15.5% y/y and core inflation (% m/m sa) decelerated for the second consecutive month.
WHAT ELSE CAUGHT OUR EYE:
- Poland’s state budget recorded a PLN 27.7 billion surplus in 1h22. The surplus was equal to PLN 15.6 billion in June alone, largely due to the PLN 10.4 billion transfer from the NBP profit. Even excluding the impact of the NBP profit, the current income situation of the budget remains good, although it is increasingly burdened by Anti-Inflation Shields and the PIT reform that is hampering VAT and PIT revenues.
- Fitch affirmed Poland’s rating at 'A-' with stable outlook. The agency underlined the country’s diversified economy, sound macroeconomic framework and lower public debt levels vs peers, along with expectations of Poland's continued resilience to external shocks.
- The NBP Quick Monitoring Survey indicates that the non-financial corporate sector expects a clear economic slowdown, but its stance in 1q22 was still very good (although varied by sectors). In 2q22, the mismatch between inventories and inventory needs diminished, but it likely resulted more from deteriorating demand outlook than easing supply tensions. The percentage of companies planning to raise wages and experiencing wage pressure has reached new record high. The average declared wage increase remained however at approx. 7%. The survey also indicates, that the recent PLN depreciation has led to a sharp decline in the profitability of imports, which resulted in a short-term suspension of import activity by some companies.
THE WEEK AHEAD:
- We expect manufacturing PMI to go deeper below the neutral threshold of 50pts. in July, as high uncertainty before the winter heating season that is hampering business climate in the European manufacturing sector is adversely affecting Polish manufacturers as well.
NUMBER OF THE WEEK:
- PLN 10 billion – the value of private humanitarian aid to Ukrainian refugees in the first three months of the war, on Polish Economic Institute estimates.