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EUROZONE DATA: Uptick In Q3 Negotiated Wages In Line With Expectations

EUROZONE DATA
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ECB Q3 Negotiated wages rose 5.42% Y/Y (vs 3.54% prior), broadly in line with the handful of analyst estimates we had seen coming into the release. We noted earlier that the ECB are likely to look through this uptick, given it was driven by temporary increases in Germany, and because the central bank’s focus has shifted more towards the weaker growth outlook in recent months.

  • There was no material reaction in EUR FX or STIR markets as a result.
  • 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 in Germany.
  • Our Policy Team’s latest sources piece suggests the IG Metall and Volkswagen pay deal “will struggle to match those recently awarded by other major firms in the metalworking sector”, possibly presenting further downside risks in Q4.
  • Q3 compensation per employee data will be released as part of the final national accounts on December 6. The ECB forecast growth of 4.5% Y/Y in its September projections. Note that Q2 compensation per employee was revised to 4.5% (vs 4.3% initial, 4.6% ECB September projections).

 

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ECB Q3 Negotiated wages rose 5.42% Y/Y (vs 3.54% prior), broadly in line with the handful of analyst estimates we had seen coming into the release. We noted earlier that the ECB are likely to look through this uptick, given it was driven by temporary increases in Germany, and because the central bank’s focus has shifted more towards the weaker growth outlook in recent months.

  • There was no material reaction in EUR FX or STIR markets as a result.
  • 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 in Germany.
  • Our Policy Team’s latest sources piece suggests the IG Metall and Volkswagen pay deal “will struggle to match those recently awarded by other major firms in the metalworking sector”, possibly presenting further downside risks in Q4.
  • Q3 compensation per employee data will be released as part of the final national accounts on December 6. The ECB forecast growth of 4.5% Y/Y in its September projections. Note that Q2 compensation per employee was revised to 4.5% (vs 4.3% initial, 4.6% ECB September projections).