WARSAW, Oct 15 (Reuters) - Polish wages rose slightly more
than expected in September, but analysts said growth should ease
in coming months as the economy slows, leaving the central bank
room to wait-and-see on interest rates.
Data from ex-communist central Europe's other two largest
economies, the Czech Republic and Hungary, confirmed a continued
slowdown there as domestic demand falters and the export outlook
darkens against a backdrop of global financial crisis.
Polish corporate sector wages <PLWAGE=ECI> grew 10.9 percent
year-on-year in September, statistics office data showed on
Wednesday, a touch above the 10.9 percent expected by analysts
in a Reuters poll and well above August's 9.7 percent.
The data also showed Polish corporate employment rose 4.1
percent year-on-year in September.
"This is slightly surprising, employment and wages dynamics
a touch above market expectations, but only a touch so this will
not really change prospects for monetary policy," said Piotr
Bujak, senior economist at Bank Zachodni WBK.
"One can expect wage growth dynamics will ease in coming
months, but will continue above the level desired by the MPC
(Monetary Policy Council) for inflationary prospects."
"This data supports the view the MPC will refrain for a
longer period from raising rates," he added.
Most economists had until recently expected the MPC to hike
rates by 25 basis points in October but Poland's slowing
economic growth and the global credit crunch have tipped the
scales in favour of the current wait-and-see approach.
"We forecast rates will remain unchanged at the end of this
year and in the first months of 2009," said Rafal Benecki,
senior economist at ING Bank, commenting on the wage data.
Inflation in September eased to 4.5 percent year-on-year,
down from 4.8 percent in August, but remains well above the
central bank's 2.5 percent target.
To quash inflation the MPC has already delivered eight rate
hikes since April 2007, raising the key rate by 200 basis points
to 6 percent in June 2008.
CRISIS
Officials say Poland, by far the largest ex-communist member
of the European Union, is well placed to weather the global
financial crisis because its banks rely largely on local
deposits and have little exposure to toxic credits.
But economists say Poland cannot avoid being impacted by
recession in some of its main export markets in western Europe.
In other data from the region on Wednesday, Czech retail
sales dipped more than expected by 3.3 percent year-on-year in
August, down from 3.6 percent in July, confirming economists'
expectations of further rate cuts.
"Nothing changes about our base scenario that we are
expecting a decline in interest rates and very likely a more
significant decline in domestic demand during the second half of
2008," said Jaromir Sindel, an analyst at Citibank.
In Hungary, whose currency and stock market have been
especially badly shaken by the global financial crisis,
industrial output dropped by an annual 5.9 percent in August,
based on final, unadjusted data <HUINDF=ECI>, data showed.
Export sales in August dropped by 7.2 percent from a year
earlier after a 0.3 percent increase in July, while domestic
sales dropped by 6.4 percent.
Hungary's forint currency -- for years the most volatile
among the EU's former communist members -- fell more than 5
percent on Wednesday alone and stocks slumped 7.2 percent amid
concerns over Budapest's reliance on external financing.
The International Monetary Fund has said it is in close
dialogue with Hungary and is ready to provide technical and
financial support to the country if required.
(Reporting by Warsaw, Prague and Budapest bureaux; writing by
Gareth Jones)
