Wage Growth Undershoots Expectations, Calendar Boosts Industrial Output

Statistics Poland published economic activity data for April. The highlight of the release is a relatively big miss in wages (only one analyst out of those polled by BBG predicted a lower outturn, i.e. AFS called for +10.1% Y/Y). The NBP's rhetoric has been placing more emphasis on wage pressures recently amid the reduction in uncertainty around fiscal matters. The signal from the data is reinforced by relatively benign PPI, even as industrial output topped forecasts.

• ING comment that a strong industrial output print confirms that the weaker March outturn was a one-off, largely driven by the calendar (March had 2 working days less), while the overall recovery trend remains intact. They maintain their 2024 GDP growth forecast at +3% Y/Y. They note that the labour market reacts to economic headwinds with a delay, but low unemployment and a minimum wage hike keep overall wage growth elevated.
• mBank write that wage growth was slower than expected, but these are still double-digit levels. Meanwhile, industrial output corrected its weak outturn for March amid creeping recovery. They note that PPI fell more than expected mostly due to the correction to March outturns. Looking at price levels, declines have ended some time ago.
• Pekao stress that wages are still growing at a double-digit pace and it's too early to call a change in the trend, but perhaps we might see a slowdown to single-digit values this autumn. Industrial output was supported by the number of working days (+2 vs. March) but this does not fully explain the upside surprise in the data.
  
• The Polish Economic Institute observe that PPI in manufacturing (the biggest sector in Polish industry) fell 8.9% Y/Y, but price declines are expected to slow in the coming months. They cite survey data suggesting that economists see 2025 PPI at +1.9% Y/Y. They expect the recovery in industrial output to continue as the financial situation of consumers will improve, although export-oriented sectors may experience a weaker period due to sluggish growth in Poland's main trading partners. They note that wage growth remains robust (rose 8.7% Y/Y when adjusted for inflation), which should support private consumption going forward. In their view, the downtick in employment was a result of adjustments in enterprises recording slower revenue growth, but overall the labour market remains very tight.