Macro roundup: Slowing wage gains track prices
Greek labour market data show that job market is far from red hot
Greece has fewer job vacancies than most of its euro-area peers, while wages and salaries seemed to fall in the first three months of the year.
The seasonally-adjusted wage cost index fell 2.3 percent in the first quarter from the preceding quarter, while the increase from the year earlier slowed to 5.5 percent from 8.8 percent in the fourth quarter. That’s less than the 5.9 average inflation rate in the first quarter. On a non-seasonally adjusted basis, the year-on-year increase in the wage cost index was 6.2 percent.
Aside from the lockdown periods of 2020 and early 2021 — when the figures look like they were distorted by a lot of lower wage workers going on to job furlough schemes — strong nominal wage growth didn’t come until the second half of last year.
But in real terms the gains have been paltry — and they come right after a 8.6 percent drop in wages costs adjusted for inflation in the second quarter of 2022.
Turning to job vacancies, there were 30,497 of these needing to be filled in the first quarter, which is the most since 2013. This could be seen as a sign of strong labour market, and it’s certainly the case that employment growth has been on an impressive trend for a number of years.
However, these figures still only translate to a vacancy rate of 1.4 percent, compared with a euro-area average of 3 percent. The vacancy rate is a measures of the ratio of job openings to the sum of openings and occupied jobs. As an indicator of how hard it is to fill positions, a higher rate can be seen as a sign of a tighter labour market.
Greece’s figures are the fourth-weakest in the euro area and comparable with those of Spain, which has the lowest rate. It has been far below the euro-area average for some time — and is still nowhere near Germany. This is even after the recent pickup in Greece and weakening in Germany, which slipped into recession this year.
This still-weak labour market — remember, for all that job growth is strong, unemployment remains in double digits — goes a long way to explaining why in Greece inflation has been almost entirely due to supply shocks, and why it is now decelerating more rapidly than the rest of the euro area.
The central government’s primary budget surplus for the first five months of the year was 2.29 billion euros, compared with a deficit of 1.49 billion euros in the same period of 2022
The primary balance was 3.69 billion euros higher than the target for a deficit of 1.4 billion euros
Net revenue of 26.2 billion euros was 2.94 billion euros higher than its target
Expenditure of 27.4 billion euros was 383 million euros lower than target
The import price index in industry dropped 17.5 percent in April from the same month a year earlier
Next week’s key releases
Tuesday, June 20:
April balance of payments (Bank of Greece)