Polish labor market likely deteriorated further in May, industrial production to contract sharply in Q2 2020

Polish labor market data for the month of May is set to release tomorrow. According to an Erste Group Research report, the labor market situation is likely to have deteriorated further in the month, reflecting the effect of lockdown measures and deteriorating financial conditions of enterprises.

“In our view, wage growth should ease to a meager 0.7 percent y/y, while employment should decline by a stronger -2.7 percent y/y”, said Erste Group Research.

Nevertheless, according to the Ministry of Family, Labor and Social Policy, the jobless rate rose only a bit to 6 percent in May from April’s 5.8 percent. Overall, the jobless rate is expected to continue to rise on average to about 6.5 percent in 2020.

Meanwhile, industrial production is expected to have restarted gradually. However, with restricted operating capacities for hygiene reasons, growth will remain subdued in the months ahead.

“Nevertheless, the contraction should be milder compered to April, as we see industrial production at -16.8 percent y/y (consensus of -18.0 percent y/y) in May. We expect the biggest hit to come in 2Q20 and a double-digit economic contraction is a highly likely scenario”, added Erste Group Research.