- Labour market data for June proved stronger than expected with average wage up 9.8% y/y and employment growing 2.8% y/y. Real wage bill grew 8.1%, the fastest since February 2019. The numbers herald a further strengthening of consumption growth and also higher core (services) inflation. Unemployment rate fell to 5.9% in June from 6.1% in May, the first y/y decline (0.2 pp) since March 2020, and another drop in sa terms.
- M3 money supply grew 7.4% y/y in June. The mortgage market is heating up, as PLN mortgage loans growth accelerated and was above 10% y/y for the first time since December 2020.
- Consumer sentiment improved in July, despite slightly bigger fears about the general economic situation. Business sentiment deteriorated, probably due to higher costs and changing structure of internal demand. While in manufacturing, construction and trade the sentiment deteriorated, situation in services (led by HoReCa) improved, likely reflecting the pent-up demand.
- The ESA fiscal deficit fell to 6.5% of GDP in 1q21 (on a 4-quarter rolling basis) compared to 7% in 2020. Probably in 2q21 the 4-quarter deficit has already declined to around 3% of GDP. Public debt amounted to 59.1% of GDP in 1q21 and it is unlikely to exceed 60% of GDP this year. Meanwhile the central budget is said to have a surplus of over PLN 25bn after June.
- PPI inflation in June accelerated to 7.0% y/y driven by rising prices of energy, commodities and production components. We forecast that the producers inflation will accelerate towards 10% y/y in 2h21.
- The number of new Covid-19 cases in Poland stopped falling. While it is still low (around 100 per day; 0.25 per 100k population), the reproduction number rose above 1.0 for the first time since early April.
