TOP MACRO THEME(S):
- Costs jump, deals slow: The sky-high growth rate of revenues of large companies (with 50+ employees) in 2q22 wasn’t enough to beat the growth rate of corporate costs, but still profits were record high another quarter in a row. Inventory build-up most likely sparked an investment demand on own storage space, but also its structure suggests that there could be a problem with demand looming on the horizon.
WHAT ELSE CAUGHT OUR EYE:
- High inflation and rising interest rates are weighing more and more on consumers in Poland. A modest 2%-ish growth of retail sales in July (in real terms) as well as a rapid decline of consumer (-1.3% y/y in July, FX adj.) and PLN mortgage lending (5.3% y/y in July) growth rates suggests that the main engine of economic growth, namely private consumption, started to falter in 3q22.
- Construction output grew only 4.2% y/y in July as new investments in real estate sector hit a speed bump.
- Registered unemployment rate stood at 4.9% in July, an all-time low.
- Minutes from the MPC meeting in July confirmed that the MPC is in a data-driven mode and some members fear accommodative fiscal policy.
THE WEEK AHEAD:
- Detailed GDP figures for 2q22 will be revealed on Wednesday. Our bet on a strong consumption (PKOe: 7.0%) and drop of investments (PKOe: -2.0%) and weaker inventory build-up could fail in light of incoming data (esp. from corporates).
- CPI inflation in August (flash estimate) most likely inched down on falling fuel prices (but still it stood above 15% y/y).
- Manufacturing PMI for August most likely stayed well below the neutral level.
NUMBER OF THE WEEK:
- 2.6% – the LFS unemployment rate in 2q22, a new all-time low.