Cautious #ECB last week amid upside risks to inflation due to solid wage growth. More data is needed to confirm that inflation is sustainably converging to target. Encouragingly, compensation per employee eased in Q4 to 2.8% from 3.6% Y/Y in line with negotiated wages. pic.twitter.com/rLmagWxE3n
— Sabrina Khanniche (@skhanniche) March 14, 2024
The Eurozone’s economic activity remained disappointingly soft in the last quarter of 2023. Yep, you heard it right – flat growth all around. This lackluster performance was dragged down by sluggish inventories and net trade. But here’s the kicker: while private consumption saw a slight uptick, consumers seemed hesitant to open their wallets fully.
What’s more, retail sales are still trailing below pre-pandemic levels by a significant 5%. It’s clear that consumers are playing it safe amidst ongoing uncertainties.
Even the European Central Bank (ECB) is feeling the jitters. Last week, they took a cautious stance amid looming inflation risks driven by robust wage growth. With inflation concerns on the rise, the ECB is treading carefully, waiting for more data to confirm any sustainable progress towards their targets.
But hey, it’s not all doom and gloom. There’s a silver lining amidst the economic clouds. Real wages are looking up, which could potentially breathe some life into consumer spending. Plus, compensation per employee eased slightly in Q4, signaling a balanced approach to wage negotiations.
So, what’s the verdict? The Eurozone’s growth may be stagnant for now, but with cautious optimism and a watchful eye on consumer sentiment, there’s hope for a rebound in the near future.