MNI BRIEF: NFC's Upbeat, Modest Wage Growth Seen: ECB Survey

Non-financial companies reported strong or growing demand across most sectors, but continuing supply constraints mean their ability to meet that demand is limited, the ECB’s latest Economic Bulletin released Friday reports, with electronic chips still in short supply.

Travel and tourism continue to recover, while service sector contacts were relatively upbeat despite the spread of Covid-19s omicon variant since November 2021. Low footfall in shops is being offset by an increase in online activity, retailers said.

Most contacts expressed optimism about the outlook for 2022, but higher and/or more persistent inflation, especially energy costs, was a concern - especially their capacity to reduce real disposable income and dampen demand. The survey also suggested that labour markets remain tight, with some shortages, albeit with geographical and sectoral variations, and the increased prevalence of home working. Wage growth is expected to pick up from around 2% to around 3% or more this year.