Poland’s retail sales and industrial output data soften in May; keeps door open for rate cuts

Poland’s retail sales and industrial output data for May came in below expectations. In seasonally adjusted terms, industrial output declined 0.9 percent on sequential basis as compared with the 2.4 percent month-on-month rise in April. It is quite early to tell if the underlying trend in the activity is moving down or not; however, this will be in line with the recent PMI behaviour, said Commerzbank in a research report.

Meanwhile, Poland’s construction activity fell by double-digit on a year-on-year basis for the sixth straight month. This is mainly due to lower state budget outlays for infrastructure, but this also shows that the private sector has not rebounded much from the construction bust of 2013, added Commerzbank.

Furthermore, retail sales also declined in May. It was supposed to have increased last month due to the child subsidy scheme. Even if additional public holidays might have offset the positive impact of the subsidy, retail sales seemed subdued after all factors were considered.

“Unless the June data bring a major rebound, such readings will keep the door open for further rate cuts later in the year,” according to Commerzbank.