Economic comment

Industrial output grew by 1.5% y/y in August, less than we (2.9%) and the market (3.4%) had expected. The rebound of industrial activity is still led by durable consumer goods albeit with some moderation of the pace of the recovery. Producer prices fell 1.2% y/y, in line with our forecast.

In August Polish corporate sector employment growth improved to -1.5% y/y from -2.3%. The improvement may come mostly from restoration of full-time employment where working time had been shortened after the outbreak of the pandemic – this would limit room for further recovery. Wage growth did not surprise, rising to 4.1% y/y from 3.8%.

Final reading of Polish CPI inflation confirmed a decline in August to 2.9% y/y from 3.0%. Services price growth eased to 6.6% y/y from 7.3%. We maintain our estimate of August core inflation at 4.1% y/y, down from 4.3% in July and expect a further decline of headline and core CPI growth in the following months. GUS foreign trade data for July showed a rebound in imports amid stabilising exports with significant recovery in trade turnover with the EU.