Eurozone wages grow at slowest pace in almost six years, raise concerns for ECB

The European Union’s statistics agency on Friday said Q2 wages were just 0.9 percent higher than in the same period a year earlier. It was the smallest increase since the third quarter of 2010 and a sharp slowdown from the 1.7 percent increase recorded in Q1.

Data highlighted the weakness of the currency area’s economic recovery and remains a cause worry for policy makers at the European Central Bank. As a result of weak wage growth, total labor costs were up just 1 percent on the year, the smallest increase since the first quarter of 2014.

The slowdown in wages is a concern for the ECB which is struggling to prop up inflation. Data released on Thursday showed the Eurozone’s annual rate of inflation was unchanged at just 0.2 percent in August. Inflation remains subdued despite the massive efforts launched by the central bank in a series of stimulus packages since June 2014.

Details of the report showed slowdown in wages growth was particularly sharp in Germany and if sustained would extinguish hopes of a stronger Eurozone recovery. Wages fell in two Eurozone members, by 0.5 percent in Italy, and by 2.3 percent in Finland.