Monex: Tegenvallende loongroei eurozone drukt op euro
Monex: Tegenvallende loongroei eurozone drukt op euro
Hieronder volgt een commentaar in het Engels van Bart Hordijk, valuta-analist bij Monex Europe, op de licht tegenvallende loongroei in Q4 2018 in de eurozone die vanmorgen bekend is gemaakt. Dat kan er op wijzen dat de consumentenbestedingen en inflatie de komende maanden minder hard zullen stijgen dan eerder verwacht. Hierdoor zal de ECB nog geduldiger moeten zijn en treedt euro-zwakte op.
Higher wage growth was the favoured horse to bet on by markets to drag both Eurozone consumption and inflation pressures out of the swamp. Unfortunately for euro bulls the Q4 Labour Cost reading surprised to the downside with a year on year growth of 2.3%, compared to 2.5% expected and in the previous quarter. Although still near decade highs, this may indicate wage pressures in the Eurozone are not further accelerating for now. Some hints for this were found earlier in Purchasing Manager Indices, that showed work backlogs are no longer rising, new business growth slows and employment growth isn’t increasing as fast as before.
In theory, higher salaries boost disposable income for households, which increases the domestic demand, which compensates for the lower external demand caused for example by a slowdown in China. Along the same lines, the higher purchasing power of consumers would increase the demand of services, which boost this sector that makes up around 70% of the economy in the Eurozone.
This increased economic activity, together with higher prices faced by producers for hiring workers, should cater to the one hope the European Central Bank carries at this moment; higher core inflation. Of course, real wages are still growing at the highest level in more than a decade, which continues to put extra money to spend – and cause inflation – in the pockets of Eurozone consumers. Nevertheless, today’s miss on the wage growth just shows this household spending may not accelerate, which limits the upside risks for a boost to the Eurozone economy, inflation and more hawkish ECB policies. This then further caps the prospects of the euro in 2019 somewhat.
Chart 1: Eurozone wage growth fails to accelerate.
