Poland, Retail sales (Aug): 5.8% y/y
Previous (Jul): 6.9% y/y
Consensus: 5.5% y/y, KBCS forecast: 5.2% y/y
Poland, Unemployment rate (Aug): 12.4%
Previous (Jul): 12.3%
Consensus: 12.3%, KBCS forecast: 12.4%
Bottom line: August retail sales figure suggests further consumer demand slowdown amid declining real wages and elevated unemployment rate. Moreover, the deteriorating outlook for the Polish economy and ongoing eurozone problems also make consumers more cautious in their spending decisions. Taking into account that these negative factors will continue to weigh on consumers, we expect the headline sales figure to remain in a weakening trend in the upcoming months. We forecast the unemployment rate will rise systematically in the months ahead and reach ca. 13.5% at the end of the year. In our opinion, the yesterday’s figures confirming the weakening domestic labor market and slower retail sales dynamics will provide some additional support for the dovish MPC members. We currently expect the Council will cut interest rates by 25bp already at the October meeting.
The August retail sales came out somewhat stronger than consensus and our forecast. However, the headline figure shows deceleration as compared to the previous month and it is the second weakest reading seen so far this year. Moreover, the sales figure in real terms, after adjusting for inflation (so-called “sales at constant prices” also reported by GUS) slowed down to 2.3% y/y from 3.4% y/y in July, below the 2Q12 quarterly average at 2.9%.
Retail sales – in real terms - decelerated in 5 out of 9 categories reported by GUS contributing to slower headline figure, including: motor vehicles (-1.1% y/y in August vs. 5.2% y/y in July); fuels (0.9% vs. 3.2%), pharmaceuticals and cosmetics (6.6% vs. 8.5%); newspaper, books and other specialized stores (-16.4% vs. -12.0%).
In the remaining 4 categories sales dynamics – in real terms - accelerated as compared to the previous month, including: food and beverages (0.1% y/y vs. -0.7% y/y previously); clothing and footwear (11.3% vs. 6.5%); furniture, RTV and household appliances (18.3% vs. 16.6%).
The unemployment rate came in line with our expectations, inching up in August, as the positive impact of seasonal factors this year has faded earlier than usual: in August last year the unemployment rate was flat as compared to July. The unemployment rate currently remains as much as 0.6pp above the rate seen in the same month last year (11.8%).