Real Retail Sales Beat Expectations, Indicating Recovery In Consumption

Statistics Poland released the second batch of economic activity data for February, with real retail sales (+6.1% Y/Y) beating consensus (+4.9%) by a decent margin. On the other hand, construction output (-4.9% Y/Y) significantly undershot expectations (-0.8%).

• ING note that the rapid pace of real wage growth is starting to affect consumption, which was evident in the strong result for real retail sales. Construction output was weak amid broad-based declines, which were least acute in building construction - possibly thanks to favourable weather conditions.
• mBank write that real retail sales outturns should improve with time as real disposable incomes of Polish households are rising at pace, consumers are increasingly optimistic, while the savings rate has already recovered. However, construction output provided a downside surprise, which may weigh on investments in 2024.
• Pekao note that the start of the year has been very weak for the construction industry and the poor February result cannot be explained by weather conditions (unlike in January). They expect a pause in public investments and a slowdown in private investments to generate a 1% decline in overall investments this year.
  
• PKO attribute the upbeat retail sales outturn for February to record-breaking real wage growth and positive calendar. They expect the consumption boom to continue in March due to the impact of Easter holidays. Meanwhile, they note that the construction sector continues to struggle after finishing investments financed by the previous EU financial framework. However, they note that high prices of residential properties are stimulating supply, although it will take time before it will translate into the number of new dwellings.