GERMAN DATA
German negotiated wages incl. one-off payments inclined 11.7% Y/Y in March (vs 5.9% in Feb), the highest yearly growth rate in the recent cycle, bringing in the Q1 growth to 6.2% Y/Y. This poses some upside risks to analyst expectations for a +4.5% Y/Y Eurozone-wide negotiated wage tracker print (released Thursday), in addition to this week's release of a firmer Q1 overall labour cost index growth (+4.9% Y/Y vs +3.4% Q4). JPMorgan now pencils in 4.7%. It printed 4.5% in Q4 23.
- While the effect of one-time payments, which was heavily driven by tax-exempt one-off inflation remunerations of up to E3000 is likely to taper off fairly quickly, the underlying uptick will be more concerning to ECB policymakers. Underlying growth (excluding one-offs) ticked up notably in March, to 4.1% Y/Y (vs 2.6% Feb).
- March saw an unusually high number of negotiated wage contracts expiring, impacting about 1.9mln workers (4% of the total workforce). Negotiations in April and May (driven by the services sector) saw a lower number of affected workers. The next large round of negotiations will be in September, when contracts in the metal and electrical industry will expire.
- Note that even if the German jump contrasts with softer readings elsewhere in the Eurozone.
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