Eurozone: Q3 labour costs in focus - Rabobank

Analysts at Rabobank suggest that the estimate of Eurozone labour costs in Q3 published by Eurostat will be the most important economic release for today’s session.

Key Quotes

“Labour costs rose 1.8% YoY in Q2, at the upper end of the sideways range of between 0.7% and 2% we have seen since 2013. With productivity growth accelerating, a number in line with that seen in Q2 should still be consistent with below-ECB target (core) inflation.”

“Moreover, indicators of negotiated wages have been lagging behind this trend (latest figure for the Eurozone was 1.4% YoY) and for now the evidence that the Phillips curve will soon re-establish itself is scant. However, should the growth rate of unit labour costs have accelerated further in Q3 – and especially if it surpasses 2% - this may stoke fears that the ECB has fallen behind the curve with its decision to extend QE until 2018Q3 at the earliest.”