Warsaw, March 23 - Polish retail sales surged 17.5 percent year-on-year in February, while unemployment slipped, data showed on Friday, signalling growth was strong, possibly topping 7 percent in the first quarter.
Analysts in a Reuters poll expected retail sales to have risen 16.2 percent year-on-year last month.
The Statistics Office data also showed investments rose 19.1 percent year-on-year for the whole of 2006, well above an increase of 16.7 percent shown in GDP data earlier in the year.
Unemployment dipped to 14.9 percent, down from 15.1 percent in January and below the 15.0 percent predicted in the Reuters poll.
The retail sales data helped weaken the local debt market slightly by strengthening investors' expectations that an interest rate rise could be closer than expected.
"Sales were higher than expected and it was the biggest growth since Poland joined the European Union," said Bartosz Pawlowski, economist at ING Bank in Warsaw.
"Those figures confirm that the economy is on the right track to reach 7 percent growth in the first quarter ... This data is bad news for the bond market as it could strengthen expectations for a rate rise." Analysts brought forward their expectations of rate hikes in Poland after a moderate on Poland's central bank policymaking council signalled on Tuesday he was ready to back a rate rise in the coming months.
Andrzej Wojtyna said the likelihood of an interest rate rises had increased in the last month and that the bank's 10-strong rate-setting council might consider a hike as soon as the first half of the year. Analysts said Wojtyna looked set to join the three hawks on the council, who have been advocating a tighter policy since last year.
The central bank's main rate has been at an all-time low of 4.0 percent since February 2006.