Poland, Retail sales (Dec): -2.5% y/y
Previous (Nov): 2.4% y/y
Consensus: 1.3% y/y, KBCS forecast: 1.4% y/y
Poland, Retail sales, real terms (Dec): -3.6% y/y
Previous (Nov): +0.7% y/y
Poland, Unemployment rate (Dec): 13.4%
Previous (Nov): 12.9%
Consensus: 13.3%, KBCS forecast: 13.3%
Bottom line: Retail sales dynamics turned negative in December, for the first time since April 2010, at -2.5%y/y, below consensus at 1.3% and our forecast at 1.4%. The retail sales in real terms, corrected for inflation, posted an even deeper decline, plunging the most since April 2010. The sales data suggest consumer demand remains under pressure due to deterioration of the situation on the labor market and stagnating real disposable income. Retail sales y/y dynamics decelerated visibly in most categories in December, apart from (1) clothing and footwear, and (2) newspaper and books (for the latter category dynamics are already largely negative). The unemployment rate went up in December, slightly above consensus, to 13.4% from 12.9% in November, above consensus at 13.3%. Apart from the usual, unfavorable seasonal effects that drive unemployment rate higher in the winter months, it is the economic slowdown that now weighs on the domestic labor market situation. As a result the unemployment rate in December 2012 was 0.9pp above the level seen in the same month of the previous year, whereas the difference was 0.8pp in November and 0.7pp in October. We expect unemployment rate will continue to move upward in the upcoming months, however, the Labor Fund for actively fighting unemployment might provide some support. We now look for unemployment rate at 14.1% in January, reaching 14.4% at the end of 1Q13. The negative sales dynamics and unemployment rate moving higher are in line with our expectations of a 25bp interest rate cut at the February MPC meeting.