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Analyst sees positive trends behind wage growth data

Fresh wage growth statistics reflect positive developments, with a slowdown in wage growth, creating no inflationary pressure, faster net wage increase, rising employment, but no increase in domestic consumption, Gergely Suppan of Takarékbank told MTI.

The Central Statistical Office (KSH) said on Thursday that gross wages rose only 0.5% yr/yr in June, while net wages were up 7.5%. The number of the employees increased 2.8% from a year earlier.

Suppan noted that the slowdown in gross wage growth means no inflationary pressure, and this could even influence the central bank's next rate-setting decision as well.

He noted that during last year's big layoffs, companies primarily laid off blue-collar workers, which resulted in faster average wage growth. This trend has now been reversed as new hirings of lower-paid workers has slowed down wage growth.

The increase in net wages reflects the impact of the changes in personal income tax rules. Faster real wage growth, however, is not matched by growing domestic consumption; the depressing retail sales figures are not expected to improve much in June. Any perceivable increase in domestic consumption is only expected to begin later, which does not favor the growth outlook, nevertheless, it is positive for financing. The latest data from the central bank also shows that households' financing capacity has reached record levels, Suppan noted.

The analyst said inflation, expected to decline from July, could further accelerate real wage growth. He said he expects to see very slow gross wage growth and a gradual increase in employment in the remaining part of the year. (MTI – Econews)