Monthly Bulletin April 2008 - European Central Bank - Europa

February, after having increased by an average
monthly rate of 1.4% over the period from
May 2007 to January 2008. Despite this
moderation in short-term movements, past
developments still imply significant accumulated
pipeline pressures which have not yet reached
the consumer level. In particular, these pressures
could have a further impact on the consumer
prices charged by food-related service providers.
By contrast, the annual rate of change in producer
prices for consumer goods excluding tobacco and
food prices continued in February to move around
the moderate level observed since the beginning
of last year. Thus there is so far no evidence of an
increase in pipeline pressures on consumer prices
for non-energy industrial goods.
Chart 21 Producer input and output price
surveys
(diffusion indices; monthly data)
80
75
70
65
60
55
manufacturing; input prices
manufacturing; prices charged
services; input prices
services; prices charged
80
75
70
65
60
55
The ongoing build-up of inflationary pipeline
pressures evidenced by producer price data appears
to be confirmed by the latest information on firms’
price-setting behaviour from the NTC Economics
Purchasing Managers’ Index (PMI) (see Chart 21).
In the manufacturing sector, the input cost indicator
increased strongly in March 2008 for the third
consecutive month. Survey respondents again said that the rising input cost pressures in manufacturing
were due to higher prices for oil, energy, metal and food products. In the services sector, the indicator of
input costs also rose to a high level, close to its seven-year peak of November 2007, with respondents
citing higher costs of food and energy. Output price indicators showed divergent developments in March,
with an easing in manufacturing and a rise in the services sector. Nevertheless, they stand well above
their historical averages.
50
45
2004 2005 2006 2007
Source: NTC Economics.
Note: An index value above 50 indicates an increase in prices,
whereas a value below 50 indicates a decrease. Data refer to the
euro area including Cyprus and Malta.
50
45
3.3 LABOUR COST INDICATORS
The picture emanating from the labour cost indicators confirms that wage developments continued
to be contained in 2007, with average annual growth rates over the year more or less in line with
those of 2006 (see Table 6 and Chart 22). Some increase was observable in the last quarter of 2007,
Table 6 Labour cost indicators
(annual percentage changes, unless otherwise indicated)
2006 2007 2006
Q4
Negotiated wages 2.3 2.2 2.5 2.0 2.3 2.2 2.1
Total hourly labour costs 2.5 2.5 2.1 2.2 2.6 2.5 2.7
Compensation per employee 2.2 2.3 1.8 2.4 2.2 2.2 2.5
Memo items:
Labour productivity 1.2 0.8 1.6 1.4 0.8 0.8 0.5
Unit labour costs 1.0 1.5 0.2 1.0 1.4 1.4 2.0
Sources: Eurostat, national data and ECB calculations.
Note: Data on negotiated wages and hourly labour costs do not include Cyprus and Malta.
2007
Q1
2007
Q2
2007
Q3
2007
Q4
38 ECB
Monthly Bulletin
April 2008