Weak start of retail and industry to Q3 in Poland

Erste Bank Research Team Erste Bank

On the radar

Real retail sales in Poland arrived at 4.4% y/y in July, below market consensus at 5.4% y/y.
In Slovenia, real wage growth reached 3.6% y/y in June.
Unemployment rate in Hungary was released at 4.2%.

Economic developments

Over the current week, the Polish statistical office released retail and industry data for the first month of Q3. Both indicators disappointed in July, despite the higher-than-expected GDP growth in Q2 suggesting a strong momentum of the economy. However, retail and industry have not been particularly strong since the beginning of the year. In Q1, it seemed that Polish consumers have taken advantage of the increase in real wages and decided to spend more than expected, but this trend reversed in Q2 and Q3 did not start well either. Yet, the average annual increase in retail sales in 2024 is a solid 4.7%, ahead of most peers in CEE. Industrial production was expected to recover at a slower pace than retail; after a disappointing Q1, the second quarter was on average above expectations. In July, the positive calendar effect caused an annual growth of industrial production of 4.9% (well below consensus of 7.3%), but in m/m terms (SA) we saw a 0.2% decline. As the strong growth in Q2 is then not completely supported by retail and industry, we see uncaptured elements pushing the GDP up, such as consumers’ spending on services or strong government consumption.

Market developments

On the FX and bond market little has changed. Since the beginning of the week, EURCZK and EURHUF moved down a bit while EURPLN on the contrary has been higher. Long-term yields are marginally higher since monday in Poland and Romania. Czech Ministry of Finance published new economic forecasts and it expects Czech economy to grow by 2.7% in 2025 due to revival of investment. Inflation should slow down as well. Today, the speech of Jerome Powell at Jackson Hole will be in the focus of investors. Currently a 25 basis point cut at the upcoming Fed’s meeting in September is priced in.

Download The Full CEE Macro Daily

Author

Erste Bank Research Team

Erste Bank

At Erste Group we greatly value transparency. Our Investor Relations team strives to provide comprehensive information with frequent updates to ensure that the details on these pages are always current.

EUR/USD meets initial support around 1.1800

EUR/USD remains on the back foot, although it has managed to reverse the initial strong pullback toward the 1.1800 region and regain some balance, hovering around the 1.1850 zone as the NA session draws to a close on Tuesday. Moving forward, market participants will now shift their attention to the release of the FOMC Minutes and US hard data on Wednesday.

GBP/USD bounces off lows, retargets 1.3550

After bottoming out just below the 1.3500 yardstick, GBP/USD now gathers some fresh bids and advances to the 1.3530-1.3540 band in the latter part of Tuesday’s session. Cable’s recovery comes as the Greenback surrenders part of its advance, although it keeps the bullish bias well in place for the day.

Gold remains offered below $5,000

Gold stays on the defensive on Tuesday, receding to the sub-$5,000 region per troy ounce on the back of the persistent move higher in the Greenback. The precious metal’s decline is also underpinned by the modest uptick in US Treasury yields across the spectrum.

Ethereum Price Forecast: BitMine extends ETH buying streak, says long-term outlook remains positive

Ethereum (ETH) treasury firm BitMine Immersion continued its weekly purchase of the top altcoin last week after acquiring 45,759 ETH.

UK jobs market weakens, bolstering rate cut hopes

In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months.

Ripple slides to $1.45 as downside risks surge

Ripple edges lower at the time of writing on Tuesday, from the daily open of $1.48, as headwinds persist across the crypto market. A short-term support is emerging at $1.45, but a buildup of bearish positions could further weaken the derivatives market and prolong the correction.