Poland: more shopping, fewer jobs

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Both pessimists and optimists have something to chew on in the latest data release on the Polish economy.

Retail sales performed better than expected, but unemployment rose to levels last seen six years ago.

The statistical agency said that retail sales in January rose by 3.1 per cent compared to the same month in 2012, a much better result than the 0.7 per cent consensus predicted by analysts.

Katarzyna Rzentarzewska of Erste Group wrote:

The increase of the retail sales figure in January is another positive surprise, after the industry growth of 0.3% y/y last week. Although we believe that it is too early to say that the trend has reversed (due to the effect of more working days in January), the latest releases may suggest that the bottom of the economic slowdown has formed.

Marek Belka, the central bank governor, was quoted as saying he was pleasantly surprised by the data, which appear to indicate that the worst is over for the Polish economy and that “it looks as though the slowdown in the Polish economy has hit bottom and is rebounding.”

The positive retail news comes after recent better-than-expected data on industrial production.

The news was much worse for workers, with unemployment rising to 14.2 per cent compared to 13.4 per cent in December.

Maja Goettig of KBC Securities wrote: “We expect the unemployment rate will continue to move upward in the months ahead driven by the negative seasonal effects and economic slowdown. We look for a peak in the unemployment rate at 14.5 per cent in February-March and 14.3 per cent at end-2013″, warning that deterioration in the labour market “is gaining pace”.

The mixed picture makes it possible that the central bank’s Monetary Policy Council could continue cutting rates in March – although opinions among analysts are divided, with some thinking that the retail data, plus recent signs of life from the German economy, may prompt the MPC to pause.

There should be a clearer idea of what is happening with the Polish economy by Friday, when the structure of GDP in the final quarter of the year will be released.

Piotr Kalisz of Citi Handlowy Bank said:

Our forecasts assume the economic growth will bottom out in 1Q 2013 at around 0.5% YoY, versus approximately 1% in 4Q. The coming quarters are likely to bring some improvement in GDP dynamics and we expect the economy to expand by 1.3% in 2013. Our forecast is below the consensus (1.5%, according Reuters) but above the European Commission’s forecast of 1.2%. In 2014 we expect growth to reach 2.8%

Related reading:
Poland: wallets closed
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Poland braced for fresh exodus of workers
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