Eurozone firms forecasting slower wage growth over the next year 

A survey shows that companies are expecting salaries to rise by 3.3% over the next year. 

Companies across the eurozone are forecasting a more moderate increase in workers’ pay over the coming 12 months, a new European Central Bank (ECB) survey has revealed.

This comes ahead of an ECB meeting on Thursday this week where it is due to discuss interest rates. It has been widely suggested that rates will be left unchanged. 

The ECB’s Survey on the Access to Finance of Enterprises shows that companies are expecting salaries to rise by 3.3% over the next year — down from 3.8% three months ago.

Firms also lowered their selling-price expectations to 3% from 3.3%.

ECB officials are focused on such measures to determine how quickly inflation will ease toward their 2% goal.

The expected decrease in wage growth will be taken as a positive sign, as 3% is a level that’s generally deemed in line with the target for consumer-price gains.

While inflation has slowed, it is elevated in the services sector, where salaries play a comparatively more important role.

In the survey, the ECB cautioned that companies in that part of the economy “expect a larger increase in selling prices, wage costs, non-labour input costs and employment over the next 12 months compared with other sectors”. 

The survey also found that firms’ inflation expectations declined, with their median expectations for annual inflation in one, three and five years all standing at 3%.

Firms also signalled more positive developments as regards the supply of bank loans.

Bloomberg