Monday, September 19, 2011
Lately, when I don't have anything I'm particularly burning to blog about, I head over to Eurostat and look at what statistics are newly available there. I figure at a minimum I'll learn a little more about the Eurozone economy and maybe once in a while I'll stumble on something genuinely interesting.
This morning what caught my eye was the labor cost statistics through quarter two of this year. As you can see above, what's striking is that the year-on-year increases have increased sharply after the trough of the great recession - labor costs are now increasing pretty much as fast as during the height of the last expansion. This makes it a little more clear why the ECB might have been concerned about inflation (thus causing them to start raising interest rates). There's a (rather mild) stagflationary flavor about the situation - unemployment high and growth poor yet labor costs increasing at a quite rapid pace.
Here is the country-by-country breakout:
As you might expect, Greece (EL), Ireland (IE) and Portugal (PT) have dropping labor costs. Remarkably, Spanish labor costs increased by 2.6% which seems like a lot for a country with a 21% unemployment rate. German labor costs increased 4.8% which does seem likely to spark concerns about inflation - I'd be very surprised if productivity was increasing that fast. German labor rates are increasing the fastest in Western Europe, with only some of the Eastern European countries increasing faster (I'm assuming the latter is some mix of rebound from the recession and catch-up productivity growth as those countries adopt western technologies and production methods.