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Q2 Labour Market Data Signals Continuing Tightness

ITALY DATA
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Italian labour market data for Q2 released this morning indicated further signs of tightness:

  • Quarterly unemployment fell to 7.6% (vs 7.9% prior), while the vacancy rate rose to 2.3% (vs 2.1% prior).
  • The increase in total employed people was countered by a -0.5% Q/Q fall in total hours worked. The lack of recovery in hours worked since Covid is a trend that can be observed across the Eurozone.
  • Productivity data released by Eurostat has shown that real labour productivity per hour worked in Italy has stagnated since 2020.
  • Taken together, these indicators are putting upward pressure on Italian wages, with Q2 labour costs rising 2.4% Y/Y for the second quarter running.

BTPs underperform peripheries this morning, but this has been more driven by the ECB's recently published opinion on the proposed bank tax and today's BTP supply rather than the labour market data. The spread of 10-Yr Italian BTPs vs Bunds is 2bps wider at 177.9bps on the day - the widest since early June - while the 2s10s and 10s30s have bear flattened.



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Italian labour market data for Q2 released this morning indicated further signs of tightness:

  • Quarterly unemployment fell to 7.6% (vs 7.9% prior), while the vacancy rate rose to 2.3% (vs 2.1% prior).
  • The increase in total employed people was countered by a -0.5% Q/Q fall in total hours worked. The lack of recovery in hours worked since Covid is a trend that can be observed across the Eurozone.
  • Productivity data released by Eurostat has shown that real labour productivity per hour worked in Italy has stagnated since 2020.
  • Taken together, these indicators are putting upward pressure on Italian wages, with Q2 labour costs rising 2.4% Y/Y for the second quarter running.

BTPs underperform peripheries this morning, but this has been more driven by the ECB's recently published opinion on the proposed bank tax and today's BTP supply rather than the labour market data. The spread of 10-Yr Italian BTPs vs Bunds is 2bps wider at 177.9bps on the day - the widest since early June - while the 2s10s and 10s30s have bear flattened.