EUROZONE DATA: Labour Cost Revised Higher, But Moderation From Q1 Remains Intact

Eurozone Q2 hourly labour cost growth was 4.7% Y/Y, an upward revision of six tenths versus last month’s flash release. 

• The flash release was compiled before the final Q2 national accounts data was available, meaning Eurostat had to estimate many inputs (e.g. compensation and hours worked) using flash/incomplete data from member states.
• As such, we wouldn’t read into the upward revision too much (and would instead advise caution when interpreting the flash release). The general theme of moderating labour costs remains intact, with Q2’s reading below last quarter’s 5.0%.
• The wages and salaries component eased to 4.5% Y/Y (vs 5.2% prior), while the smaller non-wage component was 5.2% Y/Y (vs 4.6% prior).
• At a country level, Germany (5.1% vs 5.7% prior) and Spain (3.9% vs 4.8% prior) saw the largest decelerations in overall Q2 labour cost growth, though France and Italy saw small accelerations to 3.7% and 3.3% respectively.
• At an industry level, services labour costs eased to 4.5% Y/Y (vs 4.8% prior), while “industry and construction” accelerated a tenth to 4.9%.