* Polish, Hungarian wages fall in real terms in May, June
* Analysts say fall shows crisis has hit domestic economies
By Marcin Goettig and Marton Dunai
WARSAW/BUDAPEST, July 16 (Reuters) - Hungarian and Polish wages fell in real terms in May and June, respectively, data showed on Thursday, a sign the economies already hit by falling foreign demand are also suffering on the domestic front.
Lower demand for cars and electronics goods produced in the European Union's eastern wing has combined with tighter lending to hit retail sales and investment, sending unemployment into double digits and causing bankruptcies to soar.
Many firms have trimmed wages and hours and governments -- either because of falling tax revenues or IMF-imposed austerity demands -- are exploring belt-tightening measures that have cut into public sector wages just as the economies need a home-grown impulse to help them climb out of the crisis.
Hungary's gross average wages rose by an annual 2.5 percent in May after first hitting the brakes in April. Real wages fell 2.1 percent year-on-year in the first five months.
The average wage figure was below the 3.8 percent headline inflation rate in May [ID:nBUD005058].
Polish corporate wages rose 2.0 percent in June to 3,288 zlotys, less than an analyst forecast of 2.6 percent and below inflation of 3.5 percent in June [ID:nLG26417].
Analysts said the data confirmed the economic crisis had moved from an export-based problem into the domestic realm.
They said growth -- which has already contracted across the region except for the area's biggest economy Poland -- would continue to suffer for the rest of the year.
"The worst period for Polish households has just started, as they are facing negative real wage growth and rising unemployment," said Wood & Co. Chief Economist Raffaella Tenconi.
GROWTH TO SUFFER
Hungary's May wages were influenced in particular by a drop of 1.8 percent in public salaries. The government there has scrapped extra public sector wages and frozen nominal public sector pay for two years to meet a deficit target tied to its emergency bailout from the International Monetary Fund and EU.
The central bank there said in its last inflation report it expects household consumption to fall by 8 percent this year.
In Poland, corporate employment fell 1.9 percent in June year-on-year. Analysts said the data did not change their view that Poland's central bank would keep interest rates on hold when its Monetary Policy Council (MPC) meets later this month.
But continued deceleration in wages will increase the scope for further monetary easing after the summer, they said.
Lars Christensen, chief analyst at Danske Bank, said the slowdown in Polish wages could potentially belie a need to revise growth data down from the 0.8 percent seen in the first quarter.
That scenario was also supported by budget data showing much worse than forecast tax revenues that could point to a contraction rather than marginal growth, he said.
"How come wage growth is slowing this fast while GDP growth is apparently holding up so well?" he said.
"We increasingly think that we could see a significant downward revision of Polish Q1 GDP numbers...The recent negative news on public finances in Poland is also an indication of this."
The International Monetary Fund expects Poland's economy to shrink by 0.5 percent in 2009 and recover in 2010. Poland's government expects the country to be the only ex-communist EU member to avoid a contraction this year. (Reporting by Michael Winfrey)