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Austria: Productivity growth without wage growth? (Martin Ertl)

19 Mär

Martin Ertl

Hourly nominal wages and salaries rose by 2.3 % in 2017.However, wages and salaries have remained flat since 2016, when adjusted for inflation.Hourly labor productivity, on the other hand, has picked up with average growth close to 5 %.Nevertheless, since the financial crisis Austrian real hourly wage growth has been among the fastest in Europe. In 2017, the growth in hourly wages and salaries has accelerated. Austrian businesses have paid 2.4 % higher hourly wages and salaries in 2017, compared to growth of 0.9 % in 2016. Wage growth is, however, less dynamic as it might seem. The fourth quarter of 2017 shows weaker growth than the two preceding quarters. Moreover, looking further back in time, makes clear that nominal wage growth is still below growth rates seen in the 2013-2015 period (average of 3 %).L...     » Weiterlesen


Decomposing subdued inflation in the Euro Area (Martin Ertl)

05 Mär

Martin Ertl

Euro Area inflation has remained broadly unchanged in February with core inflation at 1 %.The historical average of core inflation is 1.4 % (1999-) and 1.6 % during the pre-crisis period.Lower than average inflation in services is the underlying factor of subdued inflation post 2017.Additional support from non-core components is needed for the ECB to fulfil its inflation target. Last week Eurostat has released its flash estimate for Euro Area inflation for February 2018. Euro Area inflation was reported at 1.2 % (y/y) compared to 1.3 % in January. The flash estimate attributes the decline in inflation to slower price growth within the category food, alcohol & tobacco (1.1 %, y/y). Energy prices increased by 2.1 % (y/y) and core inflation, which excludes the categories energy and food, alcohol & tob...     » Weiterlesen


Some thoughts on US long-term yields: Expectations and expectation uncertainty (Ma...

26 Feb

Martin Ertl

Expectations and Expectation Uncertainty: some thoughts on US long-term yieldsMarket expectations of increased monetary policy tightening by the Fed have built up continuously.Inflation expectations have increased lately but remain anchored at the Federal Reserve’s inflation target of 2 %.The term premium’s U-turn is associated with a rather sudden acceleration of 10Y US Treasuries.The inflation risk premium sets sail to reach positive territory. During the first eight weeks of 2018, we have seen marked increases in government bond yields. US Treasuries at maturities of 10 years have gained almost 50 basis points (bp) trading close to 2.9 %. Comparable German Bunds have increased by around 30 bp reaching 0.7 %. The pick-up in yields has received widespread public attention being associated with...     » Weiterlesen


Last pieces of GDP-evidence confirm a favorable year 2017 (Martin Ertl)

19 Feb

Martin Ertl

Euro Area sustains the pace of its economic expansion: 0.6 % (q/q) GDP growth in Q4 2017.In 2017 the Austrian economy expanded by 3.1 % (y/y) surpassing Euro Area economic growth by 0.6 %-points.The Euro Area’s economic expansion continues to follow a supportive trend. Last week’s Eurostat flash estimate of Gross Domestic Product (GDP) for Q4 2017 has confirmed the preliminary estimate of 0.6 % seasonally adjusted quarter-on-quarter (swda, q/q) growth. Compared to the fourth quarter of 2016, the Euro Area’s economy expanded by 2.7 % (swda, y/y) which translates into an annual growth rate of 2.5 % (swda, y/y) for the whole year of 2017.Among the bigger Euro Area economies, the growth momentum during the fourth quarter of 2017 was broadly in line with the Euro Area average. The economic exp...     » Weiterlesen


USA: The impatience of stock markets (Martin Ertl)

12 Feb

Martin Ertl

We examine the link between wage growth and inflation.Prices are rigid and adjust slowly. A one %-age point rise in wages leads to 0.6 %-age points increase in prices of goods and services. It takes around one year for prices to fully adjust. Stock and bond markets plummeted following the release of the January US employment report on Friday 2nd February. Some commentators argued that this is not pure coincidence but investors’ fear of higher wages, higher inflation and higher treasury bond yields. The most important figures of the monthly report from the Bureau of Labor Statistics (BLS) are the non-farm payrolls job growth (NFP), the unemployment rate (UR) and the average hourly earnings (AHE). The prints in NFP (200.000 new jobs), the unemployment rate (4.1 %) were unexciting, while the AHE jumped ...     » Weiterlesen

Martin Ertl

Chief Economist, UNIQA Capital Markets GmbH

>> http://uniqagroup.com/gruppe/