Polish retail sales grew less than economists estimated in March as unemployment at a six-year high damped consumer spending, adding to arguments for more interest-rate cuts.
Sales rose 0.1 percent from a year earlier, compared with a 0.8 percent drop in February, the Central Statistical Office in Warsaw said today. That compared with a median forecast for a 0.3 percent increase in a Bloomberg survey of 29 economists. Retail sales grew 16.8 percent from the previous month.
Polish central bankers are open to further monetary easing after leaving rates at a record low as they assess whether a recovery has begun, Governor Marek Belka said on April 10. The reports this month showed inflation slowed to the weakest pace in more than six months and industrial output shrank in March, signaling the rebound hasn’t begun.
Today’s “data confirm weakness in internal demand, which is being curtailed by tough conditions on the labor market,” Grzegorz Maliszewski, chief economist at Bank Millennium SA in Warsaw, said in e-mailed comment today. “From the monetary-policy standpoint, the data should support those policy makers who favor more interest-rate cuts.”
The zloty depreciated more than 0.5 percent to trade at 4.1291 per euro after the report at 11:02 a.m. in Warsaw, the weakest level since April 9. The nation’s two-year government bond yield declined four basis points to a record low of 2.81 percent, according to generic data compiled by Bloomberg.
Poland’s unemployment rate fell to 14.3 percent last month from 14.4 percent in February, which was the highest since March 2007, the statistics office said in a separate report today. That was less than the median estimate of 14.4 percent in a Bloomberg survey of 29 economists.
The Finance Ministry yesterday cut its forecast for economic expansion this year to 1.5 percent from 2.2 percent, saying the euro-area recession was hurting exports and consumer spending. Individual consumption, which accounts for 62 percent of gross domestic product, fell for the first time since 1996 in the fourth quarter.
“Nothing suggests that we could see a breakthrough in the first quarter,” Halina Dmochowska, deputy head of the statistics office, said at news conference in Warsaw today. “We are still in a slowdown, growth is weak and we can’t talk about any turnaround just yet.”