Polish industrial production and retail sales grow strongly in October, strong growth momentum to continue

The Polish economic growth accelerated in the third quarter to 4.7 percent, while wages surged to 7.44 percent year-on-year in October. According to an Erste Group Research report, the Polish economy is expected to expand 4.4 percent in 2017 and 3.7 percent next year.

The industrial production report was released today that showed the output rising sharply by 12.3 percent year-on-year in October. Consensus expectations were for the output to grow 9.9 percent. The strong performance at the beginning of the fourth quarter implies ongoing solid growth momentum. Market confidence has been solid, while new orders continue to grow, indicating towards additional expansion of industry. Furthermore, favorable calendar effects further inflated the figure.

Meanwhile, retail sales grew 8 percent year-on-year, coming in below the consensus expectations of 8.5 percent. Lately, retail sales growth has been strong, owing to the rising household spending. The 500+ program rose disposable income significantly, while most recently the tight labor market conditions, especially accelerating wage growth, continue to underpin private consumption growth, stated Erste Group Research.

But the solid performance of Polish economy appears to be priced in, leaving little space for the PLN strengthening. Meanwhile, the Polish jobless rate is expected to have fallen further. The preliminary estimate of the Ministry of Family and Labor had shown that the unemployment rate fell to 6.6 percent in October.

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