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Solid rise in wage bill driving retail sales


2011-10-25

Despite deteriorating global economic conditions, mounting concerns about the future of the eurozone, and the resulting growing uncertainty about the economic outlook for Poland, retail sales at current prices jumped by 11.4% y-o-y in September, thus beating (just) the very good result recorded in the previous month. It is worth noting that the acceleration came in spite of a higher base of comparison. In real terms the improvement was more pronounced, though this was partly due to slower price growth.

In our view, the key factor that helped keep retail sales growth in double-digit territory in September was the solidly expanding wage bill. For although the yearly rate of employment growth in the enterprise sector has been declining gradually since the spring, and though wage growth remains moderate, the real wage bill in the enterprise sector has nevertheless kept rising at over 4% y-o-y.

We expect this factor to continue to drive consumption in the remainder of the year, although flagging job creation and a high reference base will slow retail sales growth down to single digits in the fourth quarter of 2011. As a result, we forecast that in 2011 as a whole retail sales at current prices will grow by a little over 10%.



Paweł Sionko
Construction Market Analyst, PMR

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