Trends in the Polish labor market confirmed in October

Average wage in the enterprise sector increased by 10.2% yoy in October, compared to a 10.3% yoy increase in September. The reading was consistent with our forecast and consensus (both 10.0%). At first glance, little happened in wages data, the details show that wages in October were affected by several multi-directional factors. Firstly, October was a month with a relatively large number of working days - there were 23, i.e. 2 more mom and 1 more yoy, which contributed to higher wage growth. Secondly, we saw the impact of a high base effect from last year, when bonuses were paid in some mining companies. If not for this effect, today's reading could have been even up to 1 ppt higher. In summary, wage pressure in the Polish economy remains strong and, although it is decelerating, it is happening at a rather snail's pace. Today's data shows that wage momentum has slightly accelerated and is still slightly above 10%.

The slight slowdown in the pace of wage growth in October gave rise to a certain forecast bet of a purely symbolic nature - will we see single-digit wage growth by the end of the year? We bet that we will not, although the November fluctuation in the number of working days will favor recording a 9% growth for the first time since December 2023. However, we are closer to the view that despite its downward trend, wage growth still has the potential to surprise upwards. In turn, in 2025, single-digit readings will become usual, but wage growth will still be above the levels from before the inflation shock (in our opinion, above 8%).

Wage momentum (% yoy SA)

Meaning how much would the annual wage dynamics be if the current monthly dynamics after seasonal adjustment lasted the entire year

Source: StatOffice, Pekao Research

In turn, average employment in the enterprise sector fell by 0.5% yoy in October, compared to a 0.5% drop in September. This result is consistent with the consensus (-0.5%) and slightly higher than our forecast (-0.6%). According to the StatOffice, the number of full-time positions fell by 3.6 thousand compared to the previous month. However, it is worth noting that employment was one step away from surprising on the downside. Namely, if the decline in the number of full-time positions reached 4 thousand, we would see a decline in employment by 0.6% yoy, which would be the weakest reading since 2021. As a result, today's employment data can be viewed as rather negative news regarding the condition of the domestic labor market. Nevertheless, we expect that the new year will bring many reasons for its rebound. The most important among them will be the continued reconstruction of domestic demand, which will translate into better business sentiment, but also an improvement in the economic situation of the main trading partners.

Cumulative change in employment since January each year (thousands)
 

Source: StatOffice, Pekao Research