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ECB Negotiated Wage Tracker Expected To Show Deceleration In Q1

EUROZONE DATA
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The ECB’s tracker of negotiated wages is due to be updated for Q1 2024 on May 23 (just under two weeks’ time). This release will provide the first official indication of Eurozone wage growth in the first quarter.

  • Eurozone negotiated wages were 4.5% Y/Y in Q4 2024, after peaking at 4.7% Y/Y in Q3. Based on national level negotiated wages data, Barclays (~4.0% Y/Y) and JP Morgan (4.3% Y/Y) anticipate a further deceleration, but note heterogeneity across countries due to differing wage settlement mechanisms.
  • Note that the Eurozone Indeed wage tracker has softened through the first three months of the year, currently tracking at 3.3% Y/Y and 3.7% 3MMA Y/Y.
  • While a June ECB cut seems all but inevitable at this stage, developments in wages will be watched closely to determine the pace of the easing cycle going forward.
  • Data will be assessed in the context of unit labour costs and the GDP deflator, moderations in which are expected in the ECB’s March projections and are necessary for further policy easing.
  • See below for key excerpts from the analyst notes:

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The ECB’s tracker of negotiated wages is due to be updated for Q1 2024 on May 23 (just under two weeks’ time). This release will provide the first official indication of Eurozone wage growth in the first quarter.

  • Eurozone negotiated wages were 4.5% Y/Y in Q4 2024, after peaking at 4.7% Y/Y in Q3. Based on national level negotiated wages data, Barclays (~4.0% Y/Y) and JP Morgan (4.3% Y/Y) anticipate a further deceleration, but note heterogeneity across countries due to differing wage settlement mechanisms.
  • Note that the Eurozone Indeed wage tracker has softened through the first three months of the year, currently tracking at 3.3% Y/Y and 3.7% 3MMA Y/Y.
  • While a June ECB cut seems all but inevitable at this stage, developments in wages will be watched closely to determine the pace of the easing cycle going forward.
  • Data will be assessed in the context of unit labour costs and the GDP deflator, moderations in which are expected in the ECB’s March projections and are necessary for further policy easing.
  • See below for key excerpts from the analyst notes: