Consumer spending in Poland has once again fallen short of expectations, adding to mounting concerns about the state of the domestic economy. Meanwhile, recent PMI readings across Europe suggest that the ongoing global trade war isn’t causing as much disruption as feared. Wednesday’s trading session proved relatively neutral for the Polish złoty.
Calm Down—It’s Just the Calendar
Today’s retail sales figures for Poland made headlines—and not for good reasons. Once again, results came in worse than expected and below zero (in real terms, adjusted for inflation). After a 0.5% drop in February, March retail sales fell by another 0.3%, disappointing analysts who had forecast modest growth.
This weak consumer performance is especially troubling in light of upcoming GDP figures, as domestic consumption has long been a pillar of Poland’s economic growth. As a result, the Polish Monetary Policy Council (RPP) now has another reason to adopt a more dovish stance on interest rates. There is growing speculation that the RPP could implement a 50 basis point rate cut as early as May.
However, before declaring the death of the Polish consumer, it’s important to consider the calendar effect. Last year, Easter fell in March, while this year it was celebrated in April. A closer look at today’s breakdown shows that spending on food, which dropped by around 10% compared to March 2024, was the biggest drag on the overall index. This suggests that April’s retail figures could show a notable rebound.
Not Afraid of the Trade War
In the broader context, it’s worth highlighting the latest PMI data—which measure business sentiment. Given the escalating trade conflict between the U.S. and much of the world, one would expect gloomy sentiment. Surprisingly, that’s not what the data show.
Manufacturing PMIs in Germany and France came in better than expected, lifting the overall eurozone PMI. While the readings didn’t cross the 50-point threshold (which separates economic optimism from pessimism), the 48.7-point result for manufacturing was still taken positively by markets. In contrast, the services index, though a full point higher, raised more concern—mainly because it fell below the key 50 mark for the first time, suggesting incipient recessionary sentiment in the services sector.
The UK’s results were especially poor: 44 points for manufacturing and 48.9 for services, both worse than previous readings. Markets now await PMI data from the United States, where analysts are also predicting a decline in business confidence.
A Calmer Wednesday for Markets
Today’s market session brought a cooling of recent volatility. After Tuesday’s sharp declines, the EUR/USD pair has recovered above $1.14, although the move is more muted compared to recent days. A similar trend is visible with the Polish złoty—which has gained slightly against the dollar, but remains stable against the euro and Swiss franc.
The euro is currently trading at 4.29 PLN, hovering near the upper range of a local consolidation zone, while the Swiss franc stands at 4.575 PLN, almost unchanged from the session’s start.
Investor sentiment is notably more optimistic on stock markets. Equity indices are showing strong gains, with Germany’s DAX up around 2.5%, and Poland’s WIG20 surpassing the 2,750-point mark.
Author: Krzysztof Adamczak, Currency Analyst at Walutomat.pl
Source: ManagerPlus.pl – Retail Sales Fall Again; RPP Gets Another Reason to Cut Rates
