Wages & Industrial Output Beat Forecasts In February

Statistics Poland released the first batch of February economic activity data, with wages and industrial output overshooting expectations. However, some desks have played down the importance of upbeat industrial production data.

• ING write that the Polish industry is recovering from stagnation, with February output topping expectations and the January reading revised higher (from +1.6% Y/Y to +2.6%). In their view, the structure of the recovery suggests that it has multiple sources, albeit not as much in domestic consumption yet. They note that real wage growth is the fastest since the 90s, while firms' readiness to hike salaries is close to record highs, which bodes well for consumption.
• On the other hand, mBank comment that industrial output remains in stagnation, with the sequential seasonally adjusted outturn for manufacturing still weak. They note that wages are on a firm uptrend, which is not due to any one-off factors, with momentum appearing to gather pace - which will be inflationary.
  
• Pekao assess that the beat in industrial output was a consequence of the upward revision to the previous reading, but "in practice we see a continuation of two-year stagnation."
  
• PKO point to a "big surprise" in wage data, but also note that households' spending plans are increasing much slower than their assessment of their future financial situation, while they also see improving saving opportunities.