EUROZONE DATA
The Eurozone Labour Cost Index (LCI) moderated to 3.4% Y/Y in Q4 (vs a downwardly revised 5.2% prior). This release doesn’t add much more to what we already knew from the Q4 national accounts data, and the ECB are much more focused on forward-looking wage indications for Q1 '24, e.g. the Indeed wage tracker (which we wrote on yesterday) and their in-house negotiated wage trackers.
- The LCI is calculated as the ratio of total labour costs (wages and salaries plus non-wage costs) and hours worked.
- In contrast to the compensation per employee data from the national accounts, the LCI release contains industry level information, which would usually be of great interest to the ECB.
- For example, the 3.4% Y/Y print was dragged down by "public administration and defence" component, which was 1.8% Y/Y (vs 3.5% prior). This component was also the reason Italian labour costs fell 0.1% Y/Y (vs 2.0% prior), falling 3.9% Y/Y.
- Amongst services firms, labour costs were 4.1% Y/Y (vs 5.7% prior), while industry and construction costs rose 4.2% Y/Y (vs 5.8% prior).
- But being released with a 3.5-month lag, it's not a release markets are concerned about in the grand scheme of things (the Q1 '24 print is due on June 17, 2 weeks after the ECB's June 6 meeting).
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