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EUROZONE DATA: One-off German Deals Expected To Skew Q3 Negotiated Wages Higher

EUROZONE DATA
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Euro-area Q3 negotiated wage growth, due Wednesday, is expected to print between 5-6% Y/Y according to a handful of analyst estimates we have seen. This would be a marked uptick from the 3.5% Y/Y in Q2, but is largely due to one-off effects in Germany. 

  • Negotiated wage growth is expected to fall back in Q4 (Citi expect 3.75% Y/Y), not least due to last week’s IG Metall Union and Gesamtmetall pay deal. Analysts have generally viewed the deal as weaker than would have been expected by the ECB.
  • As such, the ECB can probably afford to look through the uptick in Q3 negotiated wages, placing more focus on Friday’s November flash PMIs as a timely indicator of economic activity.
  • A reminder that the October Indeed wage tracker indicated a broad-based deceleration of posted wager growth across the four major Eurozone economies. See here.
  • Tomorrow, preliminary Q3 labour cost data is due. However, this series can be prone to revisions, with Eurostat needing to estimate many inputs (e.g. compensation and hours worked) using flash/incomplete data from member states.

 

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Euro-area Q3 negotiated wage growth, due Wednesday, is expected to print between 5-6% Y/Y according to a handful of analyst estimates we have seen. This would be a marked uptick from the 3.5% Y/Y in Q2, but is largely due to one-off effects in Germany. 

  • Negotiated wage growth is expected to fall back in Q4 (Citi expect 3.75% Y/Y), not least due to last week’s IG Metall Union and Gesamtmetall pay deal. Analysts have generally viewed the deal as weaker than would have been expected by the ECB.
  • As such, the ECB can probably afford to look through the uptick in Q3 negotiated wages, placing more focus on Friday’s November flash PMIs as a timely indicator of economic activity.
  • A reminder that the October Indeed wage tracker indicated a broad-based deceleration of posted wager growth across the four major Eurozone economies. See here.
  • Tomorrow, preliminary Q3 labour cost data is due. However, this series can be prone to revisions, with Eurostat needing to estimate many inputs (e.g. compensation and hours worked) using flash/incomplete data from member states.