Economic comment

In September, Polish real retail sales slowed down to 3.3% y/y from 3.8% y/y in August, roughly in line with expectations. In seasonally adjusted terms, real retail sales decelerated slightly. In October, business sentiment indicators point to a broad-based improvement in confidence among Polish firms. Prices of basic agricultural products rose 0.3% m/m in September – somewhat weaker than in the preceding three months, but in our view this is just a pause in an upward trend.

In September, Polish industrial output growth accelerated to 4.6% y/y from 4.0% y/y (August revised down from 4.3% y/y), above our and market expectations. Producer prices beat expectations again, accelerating above 6% y/y, and may push even higher in the coming months. GUS explained the unexpected 9.0% y/y collapse in construction output after a 6.6% y/y August rise with a pronounced irregularity in settlement patterns. From the MPC's perspective, the data do not provide a clear signal for the November decision. The key factors shaping the policy outlook will be the flash CPI reading and the new NBP projection. (...)

Wage growth in the enterprise sector increased in September to 5.9% y/y from 5.6% y/y in August, i.e. 0.1 pp below our and the market’s expectations. Real wage growth declined to 1.8% y/y from 2.1% y/y a month before. (...) Employment growth in the enterprise sector remained at -0.8% y/y in September, unchanged from August and in line with the market consensus. (...)