Here’s your morning brief – everything you need to know about what’s happening in the economy right now.
Wages in Poland are growing fast but slower, production is growing slow but faster
The average salary in Polish companies employing at least 10 people was 11 percent higher in June than a year ago, the Central Statistical Office reported. With inflation at 2.6 percent, this means real wage growth of 8.6 percent. On the one hand, this is very fast growth, but on the other hand, it is the slowest since December last year and slower than economists expected.
Employment in companies is slowly falling. It is 0.4 percent lower than a year ago, and compared to May it has decreased by 3.2 thousand people. Since January, employment has already fallen by 31.2 thousand people. A year ago in this period the decrease was 17.3 thousand, so the pace of employment reduction in enterprises this year is clearly higher.
The fact that the number of employees fell in June is rather unusual. In the years 2009-2022, this did not happen even once.
The Central Statistical Office also reported that industrial production in June it was 0.3 percent higher than a year ago. These data, in turn, look very modest, but firstly, they are better than in May, when production fell by 1.6 percent, and secondly, they are slightly better than analysts’ expectations, who predicted another decline, this time by 1.3 percent.
To sum up, we can say that production is growing slowly, but faster than expected, and wages are growing quickly, but slower than expected, which is probably not the worst combination.
The market still believes in a September interest rate cut in the eurozone
The condition of Polish industry depends to some extent on how good the economic situation is in the eurozone, i.e. among our most important trading partners. This in turn depends, among other things, on whether European Central Bank lowers, or raises interest rates. The wave of rate hikes in 2022, in the wake of rising inflation, has significantly weakened economic growth, so now that inflation is no longer a threat, expectations of cuts are widespread.
The ECB made its first cut in June, and now there has been another meeting of the bank’s authorities, after which no one expected another cut, but we were counting on more or less official indications that it could be expected at the next ECB meeting, i.e. in September. However, the market has not seen any clear indications, although economists who are skilled at reading between the lines believe that a cut in September is still very likely.
It is also worth noting that the bank’s head Christine Lagarde said during her press conference that there are risks of lower than expected economic growth in the eurozone. Such an observation is also a signal that cuts are possible, because it is one of the ways to mitigate the economic slowdown. The market has therefore rather stuck to its earlier assumption that in September the ECB will lower interest rates second time this year.
The market has a bigger problem with the forecast for the coming months. Until now, it was assumed that the ECB would cut rates twice in this period: in September and then again in December. Now, according to Bloomberg, this December cut is not certain.
The market reacted very mildly to Christine Lagarde’s conference, but as if it was still betting on continued cuts: the euro weakened slightly against the dollar, and the yields on German, French, Italian or Spanish bonds.
Poles still buy few electric cars because they prefer hybrids
In Poland, electric cars are still selling very poorly, according to new data from the European Automobile Manufacturers’ Association (ACEA). In the first half of the year, electric cars accounted for only 3.2 percent of total new car sales in our country. This is the third weakest result in the entire EU. Only Croatia (2 percent) and Slovakia (2.6 percent) have an even smaller share of electric cars.
The average for the entire EU is 12.5%. The most popular cars in the EU are still petrol cars, which account for 35% of sales, with hybrids in second place (29%) and diesels in third (13%). Things are different here. We buy significantly fewer electric cars, but hybrids clearly dominate new sales, accounting for as much as 46% of new cars, which is significantly above the EU average. Petrol cars are 36% in our case, and diesels are just under 9%.
In general, sales of new cars in Poland in the first half of the year increased by 16 percent, which is the second best result in the EU.right after Bulgaria, where this increase reaches as much as 30 percent. In our case, the increase in sales is mainly ensured by new hybrids (an increase of as much as 45 percent, third place in the EU). Sales of petrol cars are actually falling by 4 percent, sales of diesels are growing, but only by 1.7 percent, and sales of electric cars are growing by only 4.3 percent.
According to ACEA, the best-selling brands in the EU are still Volkswagenand after him in turn: Toyota, Renault, Skoda, BMW and Peugeot. These six brands account for as much as 40 percent of all car sales in the EU.
Intercity increases profit by 73%, but subsidies are still key
We spend more and more money on new cars, but also on train travel. Thanks to this, Intercity can boast a higher profit. Last year, it amounted to PLN 90.7 million and was 73 percent higher than in 2022. Sales revenues increased by 28 percent during this time to PLN 4.999 billion. At first glance, it looks very nice, but it is worth noting that Intercity is still an extremely low-profit company. Achieving less than PLN 100 million in profit with revenues of as much as PLN 5 billion means that the net margin is only 1.8 percent, so it is not a very good or profitable business.
Additionally Intercity in its revenues it records subsidies related to co-financing inter-provincial and international connections. These subsidies amounted to PLN 1.89 billion last year. Without them, sales revenues would be much lower, but considering that the company’s costs reached PLN 4.78 billion last year, it is clear that without these subsidies PKP Intercity could not boast of a profit, it would only have a huge loss.
In 2023, the carrier carried over 68 million passengers, which is the best result in the company’s history. A year earlier, it was almost 60 million people. PKP Intercity offers travel on four categories of trains. Your Railway Lines (TLK) and InterCity (IC) these are economic connections, and Express InterCity (EIC) and operated by Pendolino Express vehicles InterCity Premium (EIP) – express connections. Trains are the most popular TLK and IC.
Netflix is earning more and more
Netflix has to manage without subsidies, and it’s doing quite well. The report, which has just been published, shows that in the second quarter, the company’s revenue grew by 17% to $9.6 billion, and net profit increased by 44% year-on-year to $2.15 billion. The operating margin, which was 22.3% a year ago, is now 27.2%, and the net margin is 22.5%, so the leading global streaming service is definitely a better business than offering rail transport in Poland. Which is probably not surprising.
The number of customers paying for subscriptions increased for Netflix in the second quarter by 8.05 million people. This is a weaker increase than in previous quarters, but better than a year ago, when it was 5.89 million people. This data is also better than the expectations of market analysts, who expected the customer base to increase by 5 million people. In total, 277.6 million people worldwide pay monthly subscriptions to watch this service.
Despite the positive surprise in the number of new customers, Netflix shares did not grow in after-hours trading on Thursday, only falling slightly. According to some analysts, the company’s forecast for the next quarter is quite cautious, and it is also worth remembering that Netflix shares They have gone up 43.2% since the beginning of the year to their peak in early July. It is therefore possible that the market has already discounted not only good results, but also, to some extent, potential positive surprises in these results. In addition, the general mood on the stock exchanges, especially around technology companies, has not been good recently, so it is harder to get more enthusiastic reactions from investors.