Polish retail sales grew 4.3% y/y in constant prices in May, easing a little on April's return to robust expansion with a 5.5% gain, data from statistics office GUS showed on June 17.

While the reading is not the weakest of 2016, coupled with other data, it has some analysts questioning the momentum in the Polish economy in the second quarter. In monthly terms, retail sales fell 0.7%, faster than the drop of 0.3% seen in April. At current prices, growth pushed to just 2.2% y/y and dropped 0.5% m/m.

Sales grew in most retail segments on an annual basis. The quickest gain came in textiles and shoes with a healthy 18.6% expansion. Solid growth was also recorded in the automotive segment, which grew 14.6%, while sales of food increased 5.4%. On the other hand, fuel sales dipped 1.8%, in keeping with the recent trend driven by low global oil prices. That said, the drop was much slower than the 5.1% dip seen the previous month.

Despite the questions regarding momentum, the growth in May still supports forecasts that private consumption can remain a major pillar of robust economic growth, as it was in 2015. That outlook is supported by a tightening labour market and the government’s child benefit programme, which launched last month. “Broken down by product, the structure of retail sales seems solid, suggesting households are in good shape,” BGK claims. 

Capital Economics broadly agrees. “Our GDP tracker suggests that, in so far as the economy has weakened, the slowdown has been modest. Moreover, labour market data remain strong, suggesting that consumer spending should turn around in the months ahead,” William Jackson writes.