Page 11 - bne_newspaper_August_17_2018

Central Europe
August 17, 2018 www.intellinews.com I Page 11
The Czech labour market is overheated, which is causing inflationary pressures due to robust wage growth, the central bank board concluded during a June 27 meeting at which it raised the key interest rate by a quarter point to 1%. The Czech unemployment rate has fallen to 3.1% in July – one of the lowest ni the region -- and has been contracting every month for the last five months. Analysts expect unemployment to decrease again in the coming months to fall below the 3% mark – less than the structural minimum unemployment associated with a booming economy that enjoys full employment. This will put further pressure on wage growth, which expanded by 8.6% y/y in 1Q – the fastest rise in the past 10 years.
Romania is facing similar problems. Romania’s seasonally-adjusted ILO unemployment rate dropped by 0.4pp y/y to 4.5% in June, the INS statistics office reported on July 31. The Romanian unemployment rate has been on a downward trend in recent years helped by the booming economic growth last year. Three quarters
of Romanian companies reported this month they were prepared to hike wages by 15% in several key sectors as they struggle to find enough labour.
Demand fading
Retail sales are also slowing in the region. Pol-
ish retail sales have started to slow, expanding by 4% y/y in constant prices in April, the statistics office GUS announced on May 23. The reading sees sales drop 4.8pp compared to the pace of annual growth recorded in March, likely owing to buying activity slowing down in April after height- ened consumption linked to Easter took place in March. The ban on Sunday retailing also played
a role, as last month only one Sunday was open for retail.
Czech retail sales disappointed in June,
falling from record highs a month earlier, the government statistics agency reported on August 6. Seasonally adjusted sales stagnated month-on-month in June due to rising inflation, hot weather, increasing prices of housing and fewer working days. “Slower growth can be also attributed to a weakening taste of consumers
to spend money. Consumer confidence has decreased over the last two months in a row after a record-breaking high in May,” said Raiffeisenbank analyst Jakub Cervenka.
Romania’s retail sales increased by 6.6% y/y in Q2, a marginal improvement from the 6.4% y/y in Q1, but the result was still only half the 13% y/y growth in retail sales seen in the same quarter a year earlier, according to the national statistics office.