TOP MACRO THEME(S):
- This time is different, again: Labour shortages, unfilled vacancies, aging and migrations will make a downturn on the domestic labour market in 2023 look different than it was in the previous economic slowdown periods.
WHAT ELSE CAUGHT OUR EYE:
- Consumer confidence improved slightly again in January. The improvement in almost all sub-indices, with exception of savings, signals some relief in a troubled consumer sector. At the same time inflation expectations and consumers' fears of rising unemployment decreased. Inflation forecasts formulated by households fit into the scenario of approaching disinflation – a large part of households believed that the inflation shock observed in 2022 was temporary. Of course, we see some risk related to the stickiness of core inflation – its decline towards the target may be slow, or it may anchor at a higher level than in previous years, which would be supported by a mild course of the current economic slowdown and relatively high wage demands.
- Core inflation inched up in December, to 11.5% y/y (from 11.4% y/y in November). Core inflation momentum is still strong (0.9% m/m sa), although declines slowly. Our baseline scenario that a strong disinflation of commodities and energy prices, combined with a slowdown in domestic demand, will gradually translate into a decline in core inflation in the course of 2023, is still on the cards.
THE WEEK AHEAD:
- The real economy data should confirm that export-oriented industries did well in December, keeping industrial output afloat (PKOe: 0.8% y/y). Real retail sales in December continued to grow albeit at a modest pace as inflation bites consumers. Last but not least, construction continued well in civil engineering, but is on hold in buildings sub-sector.
- Money (M3) supply expansion in December (PKOe: 6.3% y/y) will most likely be accompanied by the first signs of consumer lending business bottoming out, as per banking stats.
- Unemployment rate most likely inched up (PKOe: 5.2%) on weaker demand on seasonal workers.
NUMBER OF THE WEEK:
- 7329.96 PLN - average monthly salary in corporate sector (approx. EUR 1550), crossing the 7k level for the first time.