TOP MACRO THEME(S):
- Duel of demand and supply in the labour market: Sensitivity of labour market to economic conditions has weakened in recent years, in particular in 2q21-3q22. Limited labour supply was a constraint to post-pandemic employment recovery, while at the same time remains workers’ safety buffer during the downturn. We see, however, that in 4q22-2q23 demand conditions again seemed to have a higher impact on employment.
WHAT ELSE CAUGHT OUR EYE:
- Average wage in the national economy in 2q23 equalled 7006 PLN, slowing down to 13.8% y/y vs 14.3% y/y in 1q23. It was the first quarter since 1q22 when wages grew in real terms, and the second consecutive one when the average wage for the total economy has increased faster than in the enterprise sector.
- NBP quarterly survey on credit market conditions showed a recovery of demand in 2q23, while further improvement is expected in 3q23. It is consumer segment that stands behind rebounding demand (more so with regard to mortgages than consumer loans) as well as investment loans for big enterprises. Demand for borrowing from SMEs remains subdued.
- According to the Ministry of Family and Social Policy, expenditures related to the 800+ child subsidy will reach PLN 70bn in 2024, with PLN 24bn accounting for the indexation of previous 500+ benefit programme (in line with our earlier estimates).
THE WEEK AHEAD:
- We expect that the final estimate will confirm that CPI inflation in July fell to 10.8% y/y (vs 11.5% in June), while in monthly terms prices fell by 0.2%. This might be the last reading above 10%, although as for now our estimates point to a slightly higher risk of still double-digit inflation in August. Wednesday will bring release of core inflation measures and we estimate that the main of them (CPI less food, energy and fuel) dropped to 10.7%.
- The GDP decline in 2q23 should be more profound than in 1q23 (-0.5% y/y vs -0.3% y/y), reflecting persisting pullback in consumer spending.
- Current account balance in June likely improved thanks to falling imports and resilient exports translating into deficit getting very close to 0% of GDP.
NUMBER OF THE WEEK:
- 15.10 – President A.Duda announced that parliamentary elections will take place on October 15.