ECB Wage Tracker: Euro Area Wage Growth Decelerated in 2Q24
22 August 2024
By Isabel Teles – FRANKFURT (Econostream) – Negotiated wage growth decreased in the euro area in the second quarter of 2024, according to the European Central Bank wage tracker’s latest update on Thursday.
The new data show that wage growth fell to 3.55% in 2Q24 from 4.74% in 1Q24, hitting the lowest level since 1Q23, when it stood at 4.32%.
The elevated figures registered in the first quarter of this year were attributed to one-off payments, according to a blog post published by the ECB when the 1Q24 data were released. The latest wage tracker update was not immediately accompanied by any similar explanatory publication.
On multiple occasions, Governing Council members have cited wage growth as an important piece of data, due to their influence on services inflation.
In a recent interview, Executive Board member Isabel Schnabel said that ‘quite some time’ would still be necessary to have a clearer picture of wage developments.
‘In our projections, we foresee that employment and wage growth will moderate gradually, that productivity will recover and that firms will be increasingly willing to absorb the cost surge by accepting lower profit margins. But this is not guaranteed, so we need to look at it closely’, she said on 22 July.
Even if the recent data fail to provide a definitive picture of the wage behaviour, they could still serve as a key argument in favour of another interest rate cut in the next Governing Council meeting in September.